The oil price breaking $120 exacerbates volatility in Asian currency markets, with currencies in Indonesia, India, and Philippines reaching historic lows.

Oil prices have once again risen and breached the $120 per barrel mark, putting pressure on some of the most vulnerable currencies in Asia and causing the exchange rates of multiple countries to return to near historic lows. Observations show that since the outbreak of war two months ago, the Indonesian rupiah, Philippine peso, and Indian rupee have all experienced significant declines, becoming the worst-performing currencies in the region. Data from Thursday indicates that the Indonesian rupiah and Indian rupee against the US dollar have fallen by more than 0.3% to reach new lows, while the Philippine peso is only 0.5 percentage points away from a similar low. This wave of selling highlights the high dependence of these three countries' economies on imported oil, making their currencies highly vulnerable to energy supply shocks. As energy costs soar, investors are becoming increasingly concerned about fuel-driven inflation, widening current account and fiscal deficits, which may make it more difficult for central banks to balance economic operations and control inflation. Wei Kun Chang, a strategist at a New York bank, pointed out that "central banks may adjust their foreign exchange intervention efforts to protect reserve levels, and high oil prices are a key factor in determining whether to increase market intervention efforts." The decision by the Federal Reserve on Wednesday to keep interest rates unchanged further exacerbated market volatility. Analysts believe that this move will increase investors' preference for the US dollar, as the market starts to expect a delay in the timing of interest rate cuts by major economies, adding more pressure on emerging market currencies. To make matters worse, Brent crude oil prices are lingering near a four-year high due to increased US pressure on Iran and statements from the Trump administration that "Iranian port blockades will not be lifted without a nuclear agreement." In response to these challenges, many central banks have taken action. The Reserve Bank of India has introduced special measures, including opening a US dollar swap window for oil refining companies and banning banks from providing the most common offshore rupee trading tools to curb speculation and support the exchange rate, in addition to enhancing market intervention efforts. The Bank of Indonesia has stated that it is prepared to further stabilize the Indonesian rupiah by continuing to strengthen interventions in both domestic and foreign markets, as well as tightening rules on US dollar purchases to curb capital outflows. The Central Bank of the Philippines has signaled its willingness to use a series of moderate interest rate hikes to curb inflation. However, analysts point out that without clear signs of easing tensions with Iran, the current policy effects may be limited. Lloyd Chen, a strategist at Mitsubishi UFJ Bank, emphasized in a report on Thursday that "more credible signs of tension easing are needed to alleviate depreciation pressure." The pressure has even spread beyond emerging markets - the Japanese yen against the US dollar has fallen below the 160 mark to hit a new low for the year, leading market expectations that Japanese officials may intervene to support the yen.