The U.S. military plans to strike Iran, oil prices surge to a four-year high, Nasdaq futures give up gains, Asian currencies plunge, and both corn and wheat prices rise.

In Asia, AI-driven market momentum has partially masked the broader impact of the U.S.-Iran conflict. The Korea Composite Stock Price Index (KOSPI) is on track for its best monthly performance since 1998, while Taiwan’s Taiex index is poised for its strongest monthly gain since 2001, with AI supply-chain stocks—such as TSMC—continuing to lead the rally. However, Charu Chanana, Chief Investment Strategist at Saxo Markets, cautioned: "AI has delivered a structural growth narrative to markets, but rising oil prices are transforming geopolitical risk into structural inflation risk. Given that some tech-sector positions remain relatively crowded, strong earnings alone can no longer sustain valuations." Mitul Kotecha, Head of Emerging Markets Macro Strategy at Barclays, stated bluntly that equity markets have become visibly disconnected from macroeconomic reality: "The renewed euphoria around tech and AI is ignoring all other risks." Asian currencies hit record lows across multiple countries; central bank intervention capacity constrained Oil prices breaching $120 per barrel have placed severe pressure on some of Asia’s most vulnerable currencies. The Indonesian rupiah, Philippine peso, and Indian rupee have all tumbled to historic lows—ranking among the worst-performing Asian currencies over the past two months since the outbreak of the U.S.-Iran conflict. On Thursday, both the rupiah and rupee fell more than 0.3% against the U.S. dollar, while the peso edged close to its all-time low. The root cause of this currency pressure lies in these three nations’ heavy reliance on imported oil: soaring energy prices have directly intensified inflationary pressures and raised concerns about widening current-account and fiscal deficits—leaving central banks caught between stabilizing the economy and curbing inflation. Wee Khoon Chong, strategist at BNY, noted that central banks may recalibrate the scale of their foreign exchange interventions to conserve reserves, with high oil prices serving as a key determinant of how aggressively they step in. Central banks have already taken a series of measures. The Reserve Bank of India launched a dedicated USD swap window for refiners and restricted banks’ provision of widely used offshore rupee trading instruments to curb speculation. The Bank of Indonesia announced it stands ready to intensify interventions while tightening rules on foreign-currency purchases to stem capital outflows. Meanwhile, the Bangko Sentral ng Pilipinas signaled its willingness to deploy consecutive small interest-rate hikes to rein in inflation. Yet analysts believe such efforts will yield limited results until the outlook for conflict de-escalation becomes clearer. In a Thursday report, Lloyd Chan, strategist at MUFG Bank, wrote: "More credible de-escalation signals are needed to genuinely ease depreciation pressures." The yen’s mounting pressure has also drawn market attention. The Japanese yen briefly plunged past the 160-per-dollar threshold to 160.47—the weakest level this year—sparking widespread expectations that Japanese authorities may intervene near this level. This sharp yen depreciation coincides with the Bank of Japan’s decision on Wednesday to hold its policy rate steady at 0.75%, further heightening tensions between monetary policy and market pressures. War premium spreads to agricultural commodities, corn leads rally in commodities The Middle East conflict’s ripple effects have extended beyond energy markets into agricultural commodities. Corn futures on the Chicago Board of Trade surged to $4.7925 per bushel—the highest level in nearly four years—and marked their fourth consecutive day of gains.

Still unwilling to give up? India reportedly asks state-owned refiners to use rupees to import part of its oil.

① Three refinery executives revealed that the Reserve Bank of India has instructed the country’s major state-owned refiners to pressure suppliers in the Persian Gulf to accept payment in Indian rupees for at least 10% of oil imports in the upcoming fiscal year; ② Last year, media reports indicated India had attempted to establish a rupee settlement mechanism with Russia, but those negotiations ended in failure. Caixin Global, March 5 (Editor Xia Junxiong): According to media reports citing sources, India has asked its state-owned refiners to pay part of their oil import bills in rupees. Three refinery executives disclosed that the Reserve Bank of India has directed the country’s leading state-owned refiners to urge Persian Gulf suppliers to accept at least 10% of oil payments in rupees during the next fiscal year. The executives said the move aims to bolster the Indian rupee’s role in international trade and reduce dependence on the U.S. dollar. Reportedly, the Indian government fears that the country’s robust energy demand could exert downward pressure on the rupee, while also seeking to leverage growing consumption for strategic benefit. According to the executives, Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation have already approached oil exporters on this matter—but suppliers have rejected the proposal due to exchange-rate risks and currency conversion costs. The Reserve Bank of India requested that these three refiners absorb part of the foreign-exchange transaction costs, yet they resisted the idea, arguing it would erode corporate profits.

RBI Window to Meet Refiners’ $10 Billion Monthly Need, Aid Rupee

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India's central bank introduced a special dollar window for state-run refiners to meet $10 billion monthly needs, aiming to stabilize the rupee amidst soaring crude import costs linked to geopolitical tensions.

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