Emerging markets in Asia generally fell on Friday, as ongoing tensions in the Middle East kept oil prices hovering around $100 per barrel, heightening inflation concerns and driving funds towards the safe-haven asset of the dollar.
The MSCI Emerging Markets Stock Index fell about 1% on the day, with a cumulative decline of nearly 8% since late February. Meanwhile, the Emerging Market Currency Index fell 0.3%, with a cumulative decline of about 2% during the same period.
The U.S. dollar index rose to its highest level since November 28 last year. Analysts noted that the dollar benefited not only from safe-haven demand but also because the U.S., as a net energy exporter, has a relative advantage in a high oil price environment.
Iran has vowed to continue blocking the Strait of Hormuz, which handles about 20% of the world's oil transportation. Even though the U.S. attempted to ease supply pressures by granting a 30-day exemption for Russian oil stranded at sea, the market remains concerned about the risk of energy transport disruptions.
Asian stock markets were mostly under pressure. Indonesia's Jakarta Composite Index fell more than 2% on Friday, marking its third consecutive day of decline, with a cumulative decline of nearly 17% since the start of the year, making it one of the worst-performing stock markets in the region. South Korea’s KOSPI and Thailand’s SET indices both fell by more than 1.6%, with Taiwan and Malaysia's stock markets also experiencing declines.
In the forex market, the Indian rupee fell to a record low, while the Chinese yuan was one of the few relatively resilient Asian currencies, with the trade-weighted yuan index reaching its highest level this year earlier this month.
