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INR and THB slide as oil rebound revives inflation worries
MUFG said both the Indian rupee and Thai baht fell about 1% last week versus the US dollar, with the baht hit hardest due to Thailand’s external and current account weakness.
MUFG’s Lloyd Chan said higher oil prices and lingering inflation risks are weighing on Asian currencies, leaving the Indian rupee and Thai baht under pressure versus the US dollar.
According to MUFG, the two currencies were the worst performers in Asia last week, with each depreciating by around 1% against the dollar, despite a somewhat softer US Dollar Index.
The note singled out the Thai baht as particularly vulnerable, pointing to Thailand’s deteriorating external balance and current account deficits, while renewed downside pressure has persisted even as the DXY has eased.
MUFG also linked the currency stress to oil, saying Brent has rebounded to around USD 88 per barrel as geopolitical risk premia rise and tanker traffic through the Strait of Hormuz declines, keeping US gasoline prices elevated versus pre-conflict levels.
Latest closeBrent $84.94 ▼0.0%|Gasoline (RBOB) $3.114 ▼5.7%|Dollar index 100.71 ▲0.2%