The war in Ukraine will have significant indirect effects on Asian economies via a sharp rise in commodity prices. The region is bracing for higher energy prices, which will hurt from a number of angles, with the Indian rupee and Thai bath looking the most vulnerable currencies, in the view of economists at TD Securities.

Asia bracing for the fallout

“The surge in oil prices will likely result in worsening current accounts, higher inflation, and fiscal pressures. We expect this to negatively impact INR and THB in particular. PHP and IDR will also be vulnerable to a lesser extent. CNY, SGD, KRW and MYR look to be in better shape.”

“Singapore's hit to its current account from higher energy prices can easily be absorbed while India, Thailand and Philippines would be more at risk.”

“Most of EM-Asia is likely to see a hit to GDP growth from higher oil prices, with Thailand and India more vulnerable. Inflation could also rise acutely in Indonesia, China and Thailand.”