Geopolitical tensions are putting pressure on economies around the world. The Philippine peso depreciated to 60.8 pesos to the dollar on Monday.
The currency extended its decline in March, wiping out more than 5% of its value. The Bangko Sentral ng Pilipinas (BSP) said its intervention in the foreign exchange market remains “limited to controlling large fluctuations that could impact inflation, rather than protecting a specific level,” Bloomberg reported.
The Philippines is one of the economies most exposed to supply disruptions in Asia. Approximately 98% of its oil is imported from the Gulf.
Last week, BeInCrypto reported that President Ferdinand Marcos Jr. signed Executive Order 110 declaring a national energy emergency.
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Indian Rupee and Philippine Peso vs. US Dollar. Source: TradingView
Meanwhile, India’s rupee fell above 95 rupees to the dollar for the first time on Monday, hitting an intraday low of 95.2 rupees. The Indian currency depreciated by 11% during the fiscal year, the steepest depreciation since 2011-2012.
The decline came despite recent steps taken by the Reserve Bank of India (RBI) to curb speculation. The bank has announced a policy that will limit the bank’s net open positions in the onshore foreign exchange market to $100 million per day from April 10.
The move will force lenders to shrink their books and limit their ability to make large unilateral bets against the rupee. However, this step only brought a fleeting sense of relief.
Foreign investors have shed more than $19 billion worth of Indian stocks over the past year, with March’s outflows hitting a record high for the month, according to Reuters. The sell-off intensified as concerns about the economic vulnerability of India, which relies heavily on imported energy, increased due to soaring oil prices due to conflicts in the Middle East.
“The bottom line is that the RBI cap does not change the underlying dynamics that have increased pressure on the currency,” Barclays analysts said in a note on Monday. “While the Indian rupee remains particularly vulnerable to oil supply shocks, India’s balance of payments situation is likely to deteriorate further, with pressures on capital and financial accounts increasing.”
The Strait of Hormuz remains largely closed to commercial traffic, and both countries face increasing headwinds. The coming weeks may test whether RBI’s position cap and BSP’s selective interventions can maintain boundaries.
Geopolitical turmoil is destroying Asian currencies – and central banks can’t stop it. The post appeared first on BeInCrypto.
