The Philippines' foreign-exchange reserves plunged 8.1% after the Iran conflict escalated on Feb 28, while India's buffers fell about 5.2%. Central banks from Manila to Jakarta and New Delhi have been spending reserves defending currencies amid an oil-price shock, and some governments have tightened policy or introduced import controls. Disruption to shipping through the Strait of Hormuz has tightened supplies and pushed fuel costs higher, prompting emergency steps and ongoing market interventions.

Central banks across Asia have been active in currency markets as the conflict centred on Iran pushed oil prices up and pressured exchange rates. Bloomberg-compiled data cited by two outlets show the Philippines experienced the steepest fall in reserves, sliding 8.1% to US$104 billion since the fighting escalated on Feb 28. India’s buffers fell 5.2% to US$691 billion and Indonesia’s slipped 3.8% to US$146 billion, according to the same Bloomberg-derived figures.

Reserve losses and currency moves

The reserve declines reflect both outright spending to support local currencies and valuation losses on non-dollar holdings. The Philippine peso weakened about 6.1% since the end of February, and the Indian rupee about 5%. Central banks have stepped in to limit those moves. The Philippine central bank used foreign-exchange intervention as the peso neared 60 per US dollar and has raised its benchmark interest rate, signalling it's ready to tighten further to stabilise the currency. Indonesia has suffered similar pressure, with the rupiah sliding to record lows.

Those currency moves matter because many Asian economies are net oil importers. Observers including former Reserve Bank of India governor Duvvuri Subbarao flagged that higher fuel costs will hit exports and growth, even where reserve buffers remain in place. Countries can protect exchange rates for a while, but the combination of spending reserves and valuation losses eats into those buffers.

Policy responses and the energy squeeze

Policy responses have varied, but all have been active. Indonesia has signalled it will carry out what officials call "smart interventions" and deploy the full range of monetary tools after the rupiah’s recent slide, according to reporting that cited senior policymakers. India raised import tariffs on gold and silver on May 12 to curb bullion purchases and help defend the rupee, and people familiar with the matter said authorities are considering additional emergency steps, including raising fuel prices, to preserve foreign-exchange buffers.

Mastheads

The Philippines has taken multiple steps. Authorities have intervened in FX markets and lifted interest rates to support the peso. One report notes President Ferdinand Marcos Jr.

Declared a national energy emergency, and that the government is prepared to consider an array of measures to keep supplies and prices under control.

Supply-side disruption through the Strait of Hormuz is a common theme in coverage and is cited as the immediate cause of the oil-price surge. According to an Associated Press dispatch, only about 90 vessels, mostly flagged to India, Pakistan and China, transited the strait since strikes began on Feb 28. The AP also reported that Japan released 15 days of private-sector oil stockpiles and then a month’s worth from national reserves, and that it had roughly 250 days of reserves at the end of last year. Fuel prices cited in that report rose from about 144 yen per litre a month earlier to about 175 yen at the most recent reading.

That squeeze on supply routes is forcing officials to weigh trade-offs. Drawing on reserves can stabilise a currency in the short run, but it lowers the cushion available if disruptions persist.

Raising domestic interest rates can support the exchange rate, but it also slows domestic demand. Limited options explain why some countries are combining targeted FX intervention with measures aimed at cutting non-essential demand for dollars, such as India’s tariff move on gold and silver.

Not all operational details are reported across multiple outlets. The vessel-transit count and Japan’s stockpile releases come from the AP dispatch, while the specific figures for reserve declines and currency losses are consistent across reports that cited Bloomberg-compiled data. The Philippines’ heavy dependence on Middle Eastern oil, roughly 90% of its imports according to one account, and President Marcos Jr.’s emergency declaration were detailed by NPR in a separate piece.

Officials describe actions as ongoing. India is reportedly weighing additional emergency steps to shore up reserves, including options on fuel pricing, while Indonesia has said it will continue targeted interventions in foreign-exchange markets as needed. Central-bank and fiscal moves are likely to be calibrated in the weeks ahead as oil-price pressure and trade impacts continue to affect reserves and exchange rates.

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The Philippines has declared a national energy emergency and is weighing a range of measures to protect fuel supplies and its currency reserves.

This article was created with AI assistance.