Asian currencies, stock slip on risk-off after Israel strikes Iran

(June 13): Asian stock markets and currencies fell on Friday as investors rushed to safe havens after Israel struck Iran's nuclear and military sites, deepening market jitters already stoked by global trade tensions.   

Israel said it was declaring a state of emergency in anticipation of a missile and drone strike by Tehran, after what it called a "preemptive strike" over Iran's nuclear programme.

Crude prices surged over 9% on worries about disrupted oil supplies. Rising oil prices typically pressure emerging Asian currencies by widening current account deficits in net oil-importing countries.

The South Korean won and the Philippine peso fell 0.8% each. The Indian rupee fell 0.6% while the Indonesian rupiah dropped 0.5%.   

An index measuring the dollar against six other currencies rose 0.5%, rebounding from a multi-year low hit earlier this week.   

Israel-Iran tensions are leading to a more cautious tone in markets and in turn weighing on regional currencies, said Alan Lau, FX strategist at Maybank.   

The development comes ahead of multiple central bank meetings next week such as the Bank of Japan, the Bank of England and the Federal Reserve "of which the outcomes on net could support a USD rebound," Lau said.

The Thai baht weakened 0.2%. Maybank analysts said in a note that while higher oil prices are weighing on the currency, the uptick in gold prices was providing some support.

The Malaysian ringgit lost 0.5%, in line with the broader movement, even as Malaysia stands out as the only net oil and gas exporter among the major emerging Asian economies.

Bucking the trend, the Taiwan dollar rose as much as 0.5% to its highest level in three years.            

A Taiwan-based forex trader told Reuters that while foreign investors continued to enter Taiwan, a rebound in the US dollar as well as a weakening of the South Korean won had reduced the magnitude of the currency's appreciation.

The central bank had also acted to keep the Taiwan dollar from strengthening more, keeping the currency close to the 29.5 mark, the trader said.

Stock markets across the region also fell. MSCI's gauge of Asian emerging market equities dropped 1.1%.

South Korean shares fell up to 1.5%. Equities in Taiwan were down 1%, while those in Singapore and Malaysia lost 0.4% and 0.6%, respectively. 

Read more at The Edge Malaysia      

Reference : The Edge Malaysia