Four weeks into the Iran conflict, APAC currency moves are being shaped by balance-of-payments pressure linked to energy and related by-products. Currencies in focus include MYR, THB, AUD and PHP. The Gulf’s role in supplying inputs such as helium and urea is affecting parts of the APAC economy. Mineral fuels remain the main source of regional balance-of-payments stress, with a wider negative terms-of-trade shock also expected.

North Asia Resilience

Core North Asian export economies are described as more resilient due to high reserve coverage and higher precautionary savings. Strong fiscal resources (excluding Japan) are also cited as a buffer, with FX or fixed income outflows not seen as a major concern for now. Elsewhere in APAC, Southeast Asian governments have moved towards measures such as fuel rationing. In the Philippines, President Marcos said on Tuesday that he could not rule out planes being grounded due to a lack of jet fuel. Australia, despite being a net exporter of natural gas, is facing shortages of refined petroleum. Over the past month, net selling was limited to currencies that started from an “overheld” position, while MYR, THB and AUD were described as underheld. We recall this situation unfolding in March of last year, where the conflict created a clear divide in Asian currency markets. The core issue was the terms-of-trade shock from energy by-products, which hit Southeast Asian and Australian economies harder than North Asia. This divergence we saw in 2025 continues to shape our current trading strategies.

Trade Setup Implications

The currencies of energy importers like the Thai baht and Philippine peso did indeed weaken significantly through the second and third quarters of 2025. Data from Q4 2025 showed the Philippines’ current account deficit widened to 4.2% of GDP, its highest level in over a decade, reflecting the sustained pressure from import costs. This confirmed the underlying balance-of-payments strain we were anticipating. This lasting divergence suggests setting up trades that benefit from North Asian resilience against Southeast Asian vulnerability. We see value in using options to short the Philippine peso against the Taiwanese dollar (TWD/PHP). This structure isolates the regional theme while reducing exposure to broader U.S. dollar moves. Looking at historical parallels like the 2022 energy crisis, currency weakness in import-dependent nations often persists even after the initial price shock. Central banks in those countries must then choose between supporting their currency with high rates or stimulating a slowing economy. Recent inflation figures from Thailand, which came in at a lower-than-expected 1.8% for February 2026, give their central bank more room to prioritize growth, which could weigh on the baht. For derivative traders, this means buying put options on the MYR and THB against the dollar is still a viable hedge. Implied volatility in these pairs remains elevated above their five-year averages, showing that the market is still pricing in future risk tied to energy security. We believe paying this premium is justified given the lingering uncertainty. Conversely, the Australian dollar presents a more complex picture now than it did in 2025. While the refined fuel shortage was a major headwind last year, recent January 2026 trade data showed a marked improvement in the export of processed goods. This suggests the initial bottlenecks are easing, and being underweight the AUD may no longer be the straightforward trade it was twelve months ago. Create your live VT Markets account and start trading now.

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