Asian currencies and stocks lost ground on Monday as investors waited on details around the threatened U.S. sanctions against Iran while risk appetite was subdued ahead of key central bank meetings and Nvidia earnings.
Currencies throughout the region dropped ahead of U.S. Treasury Secretary Scott Bessent's press conference later in the day, after threats of severe measures on Iran's trading partners, while Iran vowed to shut down oil exports from the Gulf.
The news piles up on uncertainty already magnified by rising developed market bond yields and ballooning debt levels, the fears of which hammered the U.S. dollar to multi-month lows and drove up gold prices.
For net oil importing Asian economies, the threat of sanctions against Iran's trading partners and the counter threat of halting oil flows, once again raises anxiety over prices and growth.
Oil prices slipped on the day ahead of the announcement as investors took profits.
"Investors are pricing in an escalation, but not a worst-case oil shock," said Glenn Yin, director of research at ACCM.
"Higher energy costs would hurt oil-importing Asian economies through inflation, weaker trade balances and pressure on currencies and equities."
Indonesia's rupiah and the Philippine peso weakened slightly, trading at 17,713 and 61.708 per dollar, respectively.
Concerns over Indonesia's fiscal health following MSCI's measures were further elevated after data revealed on Friday that its current account deficit widened to 3.3% of gross domestic product in the second quarter.
The South Korean won demonstrated resilience, briefly climbing to 1,376.50 per dollar, its highest level since mid-September, 2025. The currency, with help from a weaker U.S. dollar, gained support ahead of Bank of Korea's rate decision later this week where a 25 basis point tightening is expected.
Investors also expect the won to draw support from Samsung Electronics and SK Hynix's large shareholder return programmes, as related dollar-to-won conversions could boost demand for the local currency.
Samsung's record $79 billion shareholder-return plan, however, disappointed investors and sent its shares falling 8.7% and dragged South Korea's KOSPI 3.1% lower.
To check the health of the artificial intelligence trade that amplified global market volatility, investors will be assessing bellwether Nvidia's earnings due on Wednesday, with any surprises sure to move markets.
Stocks elsewhere trended lower. Taiwan's equity benchmark shed over 1%, while Indonesian stocks lost 0.5%.
Thailand stocks shed 0.9%, although its currency, historically linked to gold prices, gained to 32.6425 per dollar. The Bank of Thailand will meet later this week, with an interest rate hold widely expected.
Philippines stocks added 0.2%, ahead of the Bangko Sentral ng Pilipinas' meeting later this week, with the central bank also widely expected to hike rates by 25 basis points.
Vietnam stocks extended gains, adding 1%, after global index provider FTSE Russell said it would upgrade Vietnam to emerging market status from frontier in September.
HIGHLIGHTS:
** JGB yields edge higher amid fiscal, inflation worries
** Taiwan indicts nine over alleged illegal export of AI servers to China
** Xiaomi launches new Xring chip, partners with TSMC for production, sources say - Reuters
