Brent crude gains driven by Middle East tensions weigh on Indian rupee and Thai baht amid external vulnerabilities.
A rebound in oil prices is pressuring Asian currencies, particularly the Indian rupee and Thai baht, as geopolitical risks and reduced tanker flows through the Strait of Hormuz lift Brent crude. Only four vessels transited the strait on Sunday, tightening supply concerns and exacerbating current-account strains for net oil importers in the region.
The baht and rupee weakened despite a softer dollar index following June’s U.S. inflation data, signaling the pressure stems from oil-specific factors rather than broad dollar strength. Thailand’s deteriorating balance of payments amplifies downside risks for the baht, while persistent disruptions in Hormuz could extend the selloff in both currencies.
The dollar’s outlook remains complex, with potential Fed rate hikes looming if inflation persists, adding another headwind for Asian currencies alongside the oil rally.