Asian Economies Impose Emergency Measures as Currencies Crash After Hormuz Closure

Asian economies are racing to stabilize currencies that have plunged to record lows after the closure of the Strait of Hormuz triggered a global energy supply shock. India, Indonesia, and the Philippines — all major oil importers — face mounting pressure from capital outflows and a surging US dollar.

Indonesia responded with the most aggressive interventions. The government imposed a surprise 50-basis-point interest rate hike and centralized control of commodity exports to keep proceeds onshore. President Prabowo Subianto has pursued an interventionist economic agenda that has unsettled investors, and S&P Global Ratings warned that the export controls could weaken Indonesia's balance of payments and government revenue.

India has taken a different tack, urging citizens to reduce gold purchases and overseas travel while the Reserve Bank of India reportedly spends roughly US$1 billion daily propping up the rupee. Prime Minister Narendra Modi reduced the size of his official motorcade to conserve fuel, underscoring the crisis severity.

The Philippines' central bank, Bangko Sentral ng Pilipinas, has raised interest rates with further hikes possible. Across the region, policymakers face a painful dilemma: higher rates may stabilize currencies but risk stifling domestic growth already strained by soaring energy costs. The Strait of Hormuz, through which Asia purchases approximately 80 percent of its oil, remains closed, leaving these economies exposed to further deterioration unless the underlying Middle East conflict is resolved.