Regional Currencies Most Exposed
KRW, PHP and THB are described as likely to remain vulnerable under these conditions. The risk is linked to their sensitivity to higher energy costs. CNY is described as relatively insulated and more resilient, supported by a higher energy self-sufficiency rate and large strategic reserves. MYR may receive some support because it often moves in step with CNY, alongside strong domestic fundamentals. The article states it was produced using an Artificial Intelligence tool and reviewed by an editor. Given the growing risk of energy flow disruptions through the Strait of Hormuz, we should prepare for a significant shock to the region. The recent increase in naval patrols has already pushed oil price volatility higher, reminding us of the similar tensions in late 2025 that caused a temporary spike in shipping insurance costs. An extended crisis would hit Asian economies hard by fueling inflation and hurting growth.Positioning And Trade Ideas
For the coming weeks, we are positioning for weakness in the South Korean Won, Philippine Peso, and Thai Baht. South Korea’s dependency on crude oil imports, which hit 98% in 2025, makes the KRW particularly exposed to price shocks. Consequently, we are seeing increased demand for put options on the KRW as traders hedge against a sharp depreciation. A strategy to consider is shorting a basket of these vulnerable currencies against the US dollar. The Thai Baht is also a key focus, as Thailand’s net energy imports last year accounted for over 55% of its total consumption. These economies lack the buffers to absorb a sustained period of high energy prices, which will likely pressure their currencies. By contrast, the Chinese Yuan is expected to remain relatively insulated, creating opportunities for relative value trades. China’s domestic energy production now covers over 80% of its needs, and its strategic petroleum reserves provide a significant cushion. This stability suggests the CNY will likely outperform its regional peers in a risk-off environment. This resilience should, in turn, help support the Malaysian Ringgit. As a net exporter of oil and gas, Malaysia stands to benefit from higher energy prices, a fundamental strength we also noted in our 2025 outlook. Given its strong link to the stable CNY, we are looking at pairing a long MYR position against a short THB position to capitalize on this divergence. Create your live VT Markets account and start trading now.
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