Asian and world financial markets took a tremendous shock after the Israeli attack on Iran on June 13. This dangerous escalation of political tensions in the region made investors unnerved. As you can see from the above footage, the resultant destruction was staggering. Debris from an apartment building rained down on cars parked below in Tehran. With this devastation already impacting risk sentiment across Asian markets, stocks are rapidly falling in today’s session, with increased volatility in the currency markets.
The safe-haven Japanese yen jumped as much as 0.73% to the dollar. At one point, it topped 142.81. This is a growing movement to underscore investor sentiment during periods of uncertainty, where investors typically flock to safer assets in the face of geopolitical turmoil.
After the attack, most Asian currencies lost value against the dollar. The South Korean won closed down 0.9%. At the same time, both the Indian and Malaysian currencies lost ground, with each declining by 0.4% against the dollar. Additionally, the Singapore dollar fell by 0.2%. Such changes are symptomatic of a more general pattern of waning take-up by risk-seeking investors amid rising geopolitical tensions.
The short-term fallout from the Israeli military assault unsettled currency markets. It had the effect of creating the largest and most abrupt spike in oil prices in history. Brent crude jumped nearly 9% as investors reacted to the potential for a wider conflict in the region and what that could mean for global oil supply. This week, oil prices reran by 13%, underscoring even more the tight linkage between geopolitical developments outstripping market response.
As political tensions escalate even further, analysts are watching the impact upon Asian markets with suspicion. Recent falling stock prices and a volatile currency environment show that the investor community is getting nervous. Continual uncertainty regarding the security of their region leaves them in constant psychological distress.