MUFG warns higher oil prices may pressure Asian FX after tanker attacks in the Strait of Hormuz and US-Iran clashes.
Oil prices jumped at the start of the week following reports of two tankers struck in the Strait of Hormuz amid escalating US-Iran tensions. The surge is expected to pressure Asian currencies, particularly the Indian rupee, according to MUFG analysts.
The People’s Bank of China set its USD/CNY reference rate at 6.7948, above the estimated 6.7821, while holding loan prime rates steady at 3.0% (1-year) and 3.5% (5-year). The yuan has firmed as growth concerns persist.
Market liquidity thinned due to a Tokyo holiday, raising intervention risks for the yen. Meanwhile, South Korea announced plans to ease won access to move toward a freely convertible currency.