Currencies

Asian currencies once again came under heavy pressure, and the current situation can no longer be described as an ordinary short-term correction. The market environment is developing in such a way that the U.S. dollar is receiving support from several directions at once: strong economic data from the United States, rising Treasury yields, expectations of a hawkish Federal Reserve stance, and growing nervousness across global markets. Against this backdrop, emerging Asian currencies are losing stability, while some — such as the Indian rupee — are falling to historic lows.

The rupee is especially symbolic in this situation. For India, an exchange rate approaching 96 rupees per dollar is not just an unpleasant figure on a currency screen. It reflects several deep structural problems at once: expensive oil, dependence on foreign capital, and growing pressure on the country’s trade balance. India imports enormous volumes of energy resources, and when oil prices surge, the economy begins burning through foreign exchange reserves much faster than usual. The higher oil climbs, the more dollars are needed for imports. And if foreign investors simultaneously begin pulling money out of Indian markets, pressure on the national currency intensifies dramatically.

That is exactly the combination now unfolding. Rising tensions in the Middle East have increased fears of disruptions in the Strait of Hormuz — one of the world’s most important energy transit routes. Any threat to supply immediately pushes oil prices higher. For exporting nations this can be beneficial, but for major importers such as India, South Korea, and Japan, it becomes a serious economic burden.

However, oil is only part of the story. The main driver behind the dollar’s strength is still the United States. The American economy continues to show remarkable resilience despite years of elevated interest rates. Markets...