Asian currencies weakened across the board, given that a bulk of the region is highly dependent on oil and gas imports through the Strait of Hormuz, which is slowly becoming a major focus point in the Middle East war

Asian currencies weakened on Thursday as continued hostilities between the U.S., Israel, and Iran drove sharp gains in oil prices and kept markets on edge over economic disruptions due to energy.

Asian currencies weakened across the board, given that a bulk of the region is highly dependent on oil and gas imports through the Strait of Hormuz, which is slowly becoming a major focus point in the Middle East war.

The yuan’s USD/CNY pair increased 0.2%, the yen’s USD/JPY pair advanced 0.1%, while the won’s USD/KRW rose 0.2%.

The Australian dollar’s AUD/USD pair dropped 0.2%, pulling back from a near four-year high. The currency remained upbeat amid growing confidence that the Reserve Bank of Australia will raise interest rates next week.

The Indian rupee’s USD/INR pair advanced 0.3%, with the currency seen as among the most exposed to disruptions in energy supplies. ANZ analysts said they expect the rupee to remain volatile in the coming months, amid limited clarity on how the world’s fourth largest economy will navigate a fractured energy landscape.

The Singapore dollar’s USD/SGD pair added 0.2%, while the Taiwan dollar’s USD/SGD pair increased 0.1%.

The dollar rose in Asian trade, benefiting in part from haven demand, and as higher oil also drove up bets on stickier inflation in the coming months.

The dollar index and dollar index futures added between 0.2% and 0.3% in Asian trade.

A key point of concern over the Iran war is that energy-driven inflation could elicit a more hawkish stance from global central banks in the coming months.

While such a scenario bodes well for the dollar, it is likely to weigh on Asian currencies.