Asian markets fell sharply by as much as 5% after Israel carried out a military strike against Iran on June 13. This episode further heightened political tensions in the region and soured investor sentiment. Consequently, most Asian currencies depreciated against the U.S. dollar. Meanwhile, at that very same time, oil prices skyrocketed because of all that geopolitical uncertainty.
In the aftermath of the attack, the Japanese yen, usually considered a safe-haven currency, made an unusual increase. At one point, it rose by 0.73%, hitting 142.81 against the greenback. This jump is simply a symptom of investors’ rush to safety with increased uncertainty in the markets. The yen’s appreciation was an exception from the otherwise strong performance of Asian currencies.
The South Korean won performed poorly, weakening by 0.9% against the dollar, illustrating the widespread tide of depreciation currently facing Asian currencies. The Indian rupee and Malaysian ringgit were both 0.4% lower versus the dollar. At the same time, the Singapore dollar fell by 0.2%. This significant decline is a testament to the insidious effect that geopolitical events can have on regional economies.
The repercussions of an Israeli attack on Iran rippled through currency valuations. It sent a tsunami across Asian stock markets. Investors quickly responded, causing a collapse in share value as risk sentiment turned negative. The rise in geopolitical tensions raised fears about the possible escalation of military conflict and the effects this may have on economic stability.
Besides currency devaluations and stock market collapses, the total increase in oil prices was significant. Add the uncertainty produced by the ongoing conflict in the Middle East. This uncertainty usually leads to fears of supply interruptions, which then pushes crude oil prices even higher. This spike in the oil price is largely due to market fears over what will happen in the region.
Tehran was awash with condemnation after the deadly Israeli strike. Shards from a destroyed apartment building were found scattered across parked cars in a nearby neighborhood, a testament to a rapidly intensifying conflict. Beyond the attack’s immediate political and military repercussions, to say nothing of the human tragedy, speculation about the prospects for retaliation militarily, their effects on international markets, etc.