The dollar index and dollar index futures climbed 0.6% each in Asian trade, hitting their highest levels since late-November

Asian currencies pulled back on Monday as the dollar hit a three-month high after an escalation in the U.S.-Israel war with Iran sparked a rally in oil prices.

The yuan weakened even as consumer price index inflation data for February read stronger than expected on increased spending during the Lunar New Year holiday.

Risk sentiment was battered by an escalation in the Iran war over the weekend, especially after several strikes on oil infrastructure in the Middle East.

The dollar index and dollar index futures climbed 0.6% each in Asian trade, hitting their highest levels since late-November.

The dollar was buoyed by safe haven buying, while a surge in oil prices also provided support.

Oil climbed 30%, rising well past $100 a barrel and coming close to highs seen during the onset of the Russia-Ukraine war in 2022.

Iran also effectively blocked the Strait of Hormuz by attacking vessels in the shipping channel, reports showed. The Strait is a key source of oil for much of Asia, with its potential closure heralding supply disruptions for a bulk of the region.

Concerns over persistent supply disruptions and elevated oil prices dented Asian markets, especially regions perceived as more exposed to oil supply shocks.

The yen’s USD/JPY pair climbed almost 0.7%, while the won’s USD/KRW pair surged around 0.9%. This was accompanied by deep losses in their respective stock markets.

The yen took little support from stronger-than-expected wage income data for January, which showed a strong increase in wages– a trend that could underpin medium-term inflation expectations in Japan.

The Australian dollar’s AUD/USD pair– usually seen as an indicator of Asian risk appetite– dropped 0.5%.

The Indian rupee’s USD/INR pair added 0.6% and crossed the 92 rupee level, while the Singapore dollar’s USD/SGD pair climbed 0.3%.

The yuan’s USD/CNY pair added 0.35% on Monday, rising above the 6.9 yuan level. The currency was also pressured by a weaker midpoint fix from the People’s Bank.