Asian financial markets and currencies have experienced significant volatility and weakness following the escalation of the Iran conflict, with multiple sources highlighting the fragile footing of Asian FX and broader market declines. OCBC strategists note that Asian FX, including the South Korean Won (KRW), Philippine Peso (PHP), and Thai Baht (THB), have shown tentative stabilization after a multi-week sell-off but remain vulnerable, especially in the absence of a quick resolution to the Iran conflict. Policymakers are expected to intervene to smooth price action as several currencies test multi-year or all-time lows, and spillovers onto food, fertilizer, and tourism risks are building [1].
The Philippines declared a national energy emergency on Wednesday to counter risks posed by Middle East supply disruptions, which has contributed to record weakness in the Peso and underperformance in equity markets. DBS Group Research removed its previously projected rate cut from its baseline forecast, expecting the Bangko Sentral ng Pilipinas (BSP) to maintain an extended pause in rates due to inflation and growth concerns. Official growth forecasts for the Philippines were cut to 4.6% for 2026 and 5.9% for 2027, down from earlier projections of 5.4% and 6.3%, respectively, amid graft-related investigations and slower public disbursements [2].
Singapore's growth outlook has also tilted to the downside, with UOB reporting a broad-based weakness in February industrial production (IP), which contracted by -7.2% month-on-month seasonally adjusted and -0.1% year-on-year, missing forecasts. While the 2026 GDP growth forecast is maintained at 3.6% (2027: 2.0%), risks are seen as increasingly negative, especially if the US/Israel–Iran conflict persists beyond one quarter. Manufacturing, wholesale trade, and transportation sectors are particularly exposed, and external demand may be dampened by weaker sentiment and supply-chain disruptions [3].
The New Zealand Dollar (NZD) has also come under pressure, with the NZD/USD pair slipping to the 0.5760 region as the US Dollar (USD) strengthens amid elevated US yields and safe-haven demand. Persistent geopolitical tensions and elevated energy prices have weighed on risk-sensitive currencies, with technical analysis indicating a mildly bearish bias and resistance at 0.5777 and 0.5781, while support is seen at 0.5747 [4].
Asia-Pacific equity markets tracked losses on Wall Street, with President Donald Trump extending his deadline to attack Iran's energy infrastructure by 10 days to April 6 to allow for negotiations. Oil prices initially rose but later eased, with West Texas Intermediate for May delivery down 1.3% at $93.29 per barrel and Brent crude settling at $108.01. Major Asian indices fell: Australia's S&P/ASX 200 by 0.42%, Japan's Nikkei 225 by 0.9%, South Korea's Kospi by 3%, and Hong Kong's Hang Seng index futures lower than the previous close. US futures climbed as oil price worries eased, but the S&P 500 ended down 1.7%, its biggest daily drop since early 2026, and the Nasdaq Composite dropped 2.4%, entering correction territory [5].
CONCLUSION
The Iran conflict and related energy supply risks have triggered broad-based weakness in Asian currencies and equity markets, with policymakers and central banks responding cautiously. Growth forecasts have been revised downward in the Philippines and Singapore, and risk-sensitive currencies like the NZD remain under pressure. The market sentiment is negative, and volatility is expected to persist as geopolitical tensions and energy concerns continue to weigh on investor confidence.