The geopolitical risks from an escalating crisis in Iraq are hard to predict, but the impact on currency markets from the rise in oil is clear, analysts at Mizuho Corporate Bank said in a research note.
“Unsurprisingly, currencies of the largest oil importers, such as India and Korea (the third and fourth largest global crude importers respectively) have taken a significant initial hit,” they added. The Indian rupee last week hit its lowest level against the U.S. dollar since late April, while the South Korean won was pushed off a six-year high around 1,015 per dollar.
Asia is heavily dependent on oil imports and according to the U.S. Energy Information Administration, seven of the world’s top 15 net oil importers are from the region. China, Japan, India and South Korea are all in the top five, with the U.S. leading the list.