According to a study by the Asian Development Bank, the Philippines, Singapore, Thailand, India and Hong Kong are likely to be the most negatively affected. Historical correlations with oil prices over the past six months show Hong Kong three-month forwards (54%), the Indian rupee (46%), the yen (41%) and the Thai baht (31%) with the highest association of currency weakness with rising energy oil prices, said David Mann, senior international economist at Standard Chartered in London.
But analysts warn that high oil prices must be viewed in the context of global economies. There have also been concerns over interest rate hikes in the US, leading to a slowdown in growth, globally, in the world trade cycle. "There’s probably a twofold impact because you get directly hit and then you get hit indirectly vis-a-vis the export channel," said Arthur Woo, economist at HSBC in Hong Kong.
The weakness does depend partly on what the demand conditions are like in the rest of the economy as well as external growth prospects, and consequentially the outlook for Asian exports in general, says Sameer Goel, regional strategist at Bank of America in Singapore. This, coupled with weak local confidence, spells bad news for some currencies.
However, Goel notes that that weakness is to some extent "just an unwinding of appreciation".
Others believe weakness also comes from strength in the US dollar that is unrelated to the oil factor. "Everybody was long Asia and short dollars, now you’ve got all these Fed rate hikes so people are reversing their positions," said another unnamed strategist.