Asian forex slightly higher, but still set for a weekly decline due to Iran conflict and soaring oil prices

LootboxPhobia · 2026-03-06T06:24:52+00:00

On Friday, the US dollar weakened slightly, boosting most Asian currencies, but overall declined due to escalating Middle East conflicts and soaring oil prices. Oil prices surged over 15%, sparking inflation concerns and affecting the Federal Reserve's interest rate outlook. Investors are focused on the upcoming US non-farm payroll report.

LootboxPhobia

2026-03-06 06:24:52

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Investing.com - On Friday, as the US dollar weakens slightly, most Asian currencies rise modestly. However, due to escalating Middle East conflicts and soaring oil prices, investor sentiment remains pressured, and the week is still expected to close lower.

The US dollar index fell 0.3% during Asian trading hours, after reaching a three-month high overnight. The index is up 1.5% this week.

As of 00:12 Eastern Time (13:12 Beijing Time), US dollar index futures also declined 0.3%.

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Iran conflict causes Asian currencies to fall this week

Ongoing clashes involving Iran, Israel, and the US have entered their seventh day on Friday without signs of easing, shaking investor confidence.

The conflict has raised concerns over disruptions to global energy supplies, especially through the Strait of Hormuz, a narrow shipping channel that carries about one-fifth of the world’s oil.

Oil prices surged sharply this week, with traders pricing in the risk of supply disruptions in the Middle East. Oil has risen over 15% this week.

Most economies in the region are major energy importers, so rising crude prices could worsen trade balances, boost inflation, and put pressure on their currencies.

The Korean won against the dollar (USD/KRW) fell 0.6%, but is up 2% for the week.

The Japanese yen against the dollar (USD/JPY) remained flat, but is up 1% this week.

The onshore Chinese yuan (USD/CNY) rose 0.2%, also recording a weekly gain.

The Singapore dollar (USD/SGD) declined 0.2% on Friday.

The Australian dollar (AUD/USD) rose 0.4%, but still closed the week lower.

Oil price surge raises concerns over Federal Reserve rate outlook

Rising inflation risks have complicated monetary policy prospects. As energy prices climb, inflation could be pushed higher again, tempering expectations of a rate cut by the Federal Reserve.

As a result, traders have scaled back some bets on a rate cut by the Fed this year, supporting the dollar.

Investors are awaiting the US February non-farm payroll report later on Friday, which could provide new signals about labor market strength and the direction of monetary policy.

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