Syria Hits Asian Stocks as Indian Rupee Continues to Weaken

The growing likelihood of Western military action against Syria pummeled Asian stock markets Wednesday and sent the price of oil soaring. India’s rupee, already under pressure from the country’s deteriorating economic and financial situation, fell dramatically.

Fears that the U.S., Britain and other countries are gearing up to confront Syria over its alleged use of chemical weapons against civilians rose after Defense Secretary Chuck Hagel said the U.S. military stands ready to strike against Syria if President Barack Obama gives the order.

“Investors are sort of battening down the hatches a bit. I get the sense that this looks like a situation that is likely to be with us for a while,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “One reason the market has started to fall is that people are thinking this may not be a one-off blip that will only last a week. The stakes have been raised by the use of chemical weapons,” he said.

Gold prices and U.S. government bond prices advanced because traders see those investments holding their value better in times of uncertainty. Assets considered risky even in normal circumstances went into a tailspin. India’s rupee reached a new low against the U.S. dollar. One dollar now buys about 68.4 rupees compared with 66.2 rupees only a day earlier. The stock benchmark in the Philippines shed 4.6 percent.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza