Emerging Asian currencies continued to be under pressure on Monday as Middle East conflicts escalated, pushing up oil prices and strengthening the US dollar as a safe-haven asset.
The Indonesian rupiah was among the worst-hit currencies, falling 1.19% since the week opened (Monday) to 17,668 against the US dollar.
It was the biggest daily drop since September last year. The fall also put the rupiah on track for its worst monthly performance since 2016.
Market sentiment weakened after new drone attacks were reported in the Gulf region, while Iran was seen tightening control over the Strait of Hormuz, a vital route for world oil trade.
The situation has raised concerns about global energy supply disruptions.
The pressure on the rupiah is not only due to rising oil prices, but also due to concerns about Indonesia's fiscal discipline, foreign investor outflows and issues with the independence of the country's central bank and stock market.
Jakarta's stock market was also hit as the main index fell more than 4% to 6,425.95, marking its fifth straight session of losses. Overall, Indonesia's benchmark index has fallen more than 25% since the start of 2026.
In an effort to stabilize the currency, Bank Indonesia has reportedly continued to intervene in the currency and government bond markets, while also hinting at a possible change in monetary policy to ease pressure on the rupiah.
This week's Bank Indonesia policy meeting is now the focus of the market, with the current interest rate left at 4.75% after seven consecutive meetings with the rate unchanged.
Citi analysts expect a possible rate hike if pressure on the local currency continues to build.
Apart from Indonesia, the Indian rupee also hit an all-time low of 96.185 against the US dollar. The currency has now fallen about 5.5% since the Iran conflict began pushing oil prices higher in February.
The Malaysian ringgit was no exception, falling 0.7% to 3.9750 against the US dollar, nearing the key psychological level of 4,000. The South Korean won and the Taiwanese dollar also recorded moderate declines.
MUFG analyst Michael Wan said the combination of a stronger US dollar, high US bond yields and a surge in energy prices was putting significant pressure on emerging market currencies, particularly oil-importing countries such as Indonesia and India.
Meanwhile, the US dollar index continued to rise for a sixth consecutive session, while the MSCI emerging market currency index fell for a third consecutive day on the back of significant pressure in global bond markets.
