High Oil Prices Weigh on Asian Oil-Importing Nations' Currencies; Indonesian Rupiah Shorts Hit Nearly Two-Month High
nashnova research
A Reuters poll shows bearish bets rising on the rupiah, rupee, peso and baht as elevated crude prices and widening U.S. yield premiums squeeze Asia's oil importers — a double hit of current-account erosion and capital outflows.
How do high oil prices hurt these currencies?
Rising crude directly erodes the current-account buffer — the trade-balance cushion — of net oil importers: the more they pay for oil, the more foreign exchange drains out.
This means → economies that buy large volumes of crude — India, Indonesia, the Philippines, Thailand — see their currencies hit first.
Jeff Ng, head of Asia macro strategy at Sumitomo Mitsui Banking, named the Indian rupee, Philippine peso and Thai baht as the most vulnerable.
Does the U.S. yield advantage make it worse?
The U.S. 30-year Treasury yield rose to a 22-year high last week; several Fed officials signalled further tightening may be needed.
In plain terms = higher U.S. yields pull capital out of Asia and into dollar assets — shrinking the appeal of Asian currencies even further.
MUFG analysts highlighted the Thai central bank's policy rate at just 1% — leaving the baht with almost no interest-rate defence against the dollar.
How large are the short positions now?
Indonesian rupiah shorts rose to their highest since late July — the most concentrated bearish sentiment in this survey round.
Indian rupee shorts climbed to the highest since early June, despite repeated intervention by the Reserve Bank of India to limit the decline.
This reflects a market view that even central-bank action cannot offset the fundamental drag of high oil prices plus an interest-rate disadvantage.
Who is bucking the trend?
The Malaysian ringgit is holding up — Malaysia is a net oil-and-gas exporter, so higher energy prices work in its favour.
The Korean won posted net longs for a fifth consecutive survey; AI-chip exports by Samsung and others support Korea's current-account surplus. The won has gained over 5% against the dollar this year.
Renminbi longs have run for a full year; Singapore dollar longs have held steady since early August — together with the won, these are the only positive-return emerging-Asia currencies.
Can this divergence last?
Two variables will decide: the path of oil prices and the Fed's policy trajectory.
This means → if crude stays elevated and the Fed keeps tightening, the FX gap between importers and exporters will widen further.
Maybank strategist Fiona Lim noted that central banks have pledged to keep regional currencies stable — but whether they can deliver depends on how much room those two variables leave them.
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