Asian currencies experienced their steepest weekly decline in over three years, with most major regional currencies heading for significant losses. According to The Economic Times, the Indian rupee fell 1.4% to close at 94.2475, marking its steepest weekly decline in over three years and declining in all five trading sessions. The Philippine peso weakened 0.5% to 60.755 per dollar, hitting its lowest level since late March and losing nearly 2% so far this week - its worst performance in seven weeks. The Indonesian rupiah firmed slightly before paring gains, trading around 17,290 per dollar, not far from the record low of 17,320 touched on Thursday.
Brent crude oil futures were last up 2% at $107.25 per barrel, contributing significantly to the rupee's decline. As reported by The Economic Times, the surge in oil prices was driven by worries over the fragility of a U.S.-Iran ceasefire and disrupted energy flows. MUFG noted that while the current ceasefire represents a de-escalation from more intense military conflict, the U.S. blockade remains in place, building risks for a significant spike in oil prices. According to Societe Generale strategist Galvin Chia, currencies among the most heavily oil import-dependent economies should continue to remain vulnerable - including the likes of INR, IDR, PHP and THB. Latest reports show Brent crude prices rose more than 17% this week, hovering above $105 per barrel as the Strait of Hormuz remains largely closed despite extended ceasefire agreements.
The war has been paused since a ceasefire on April 8, but diplomatic efforts have stalled. According to The Economic Times, the U.S. and Iran met in Pakistan on April 11 and 12 in an attempt to end hostilities, but talks ended without agreement and a second round is yet to take place. This uncertainty has kept investors on edge heading into the weekend, contributing to the broader market volatility. As per The Economic Times, the fragility of the truce has kept investor optimism in check despite U.S. President Donald Trump extending the ceasefire with Iran indefinitely. Iran showed off its tightened grip on the Strait of Hormuz by releasing a video of commandos storming an enormous cargo ship, highlighting its control over the world's busiest shipping route where 20% of global oil and gas normally flows. Trump announced that he ordered the Navy to 'shoot down and kill' Iranian vessels laying mines in the Strait, with reports of Iranian officials accusing Washington of violating the truce through continued blockade operations.
Gold prices dropped to a new low after Middle East conflict fuels inflation fears, with the metal falling 3% this week after a four-week streak of gains. As reported by Energy News, spot gold was down by 0.9% to $4,697.06 an ounce after reaching its lowest level since April 13th. The precious metal is trapped between the 50-day average of $4,900 at the top and the 20-day average of $4,645 at the bottom. Silver dropped 2.7% to $75.55 an ounce, platinum lost 3.2% at $2,082.22, and palladium fell 5% to $1,465.23. Gold's decline is attributed to higher interest rates making yield-bearing investments more appealing, reducing the appeal of non-yielding bullion despite gold's traditional role as an inflation hedge. U.S. 10-year Treasury yields have risen over 2% this week, increasing the cost of holding gold.
