When Your Currency's Best Friend is Oil (And Oil is Going Through It)

Geopolitical turbulence is throwing a wrench into Asian currency markets, and central banks are discovering their playbooks look more like suggestion boxes than rulebooks these days.

The Philippine peso just had a date with destiny at 60.8 per dollar on Monday, extending a March slide that's erased over 5% of its value faster than you can say "rug pull." The Bangko Sentral ng Pilipinas (BSP) insists its market intervention remains limited to "tempering large swings that could affect inflation rather than defending any specific level." Translation: we're not HODLing any particular level, just trying not to look completely helpless. The Philippines happens to be one of Asia's most exposed economies to supply disruptions—it imports roughly 98% of its oil from the Gulf, which is basically showing up to a crypto conference without cold storage. Last week, President Ferdinand Marcos Jr. signed Executive Order 110, declaring a state of national energy emergency. Nothing says "vibes are off" like an executive order about energy.

Over in India, the rupee decided to join the party by slipping past the 95-per-dollar mark for the first time on Monday, touching an intraday low of 95.2. The rupee's dropped 11% over India's fiscal year—its steepest fall since 2011-12, which was back when Bitcoin was still trying to explain itself to grandma. Despite the Reserve Bank of India (RBI) recently moving to cap banks' net open positions in the onshore forex market at $100 million per day (effective April 10), the relief was about as lasting as a leveraged long position in a bear market.

Foreign investors have been exiting Indian equities like it's a final exit on the highway, dumping more than $19 billion worth over the past year, with March marking an all-time monthly high for outflows. Soaring oil prices driven by the Middle East conflict have only added fuel to the fire—or maybe more accurately, taken fuel away from the rupee, because apparently diversification is just a suggestion.