Traders adjust interest rate pricing in several Asian regions amid surging oil prices

Golden Ten Data, March 6 – As traders increase their bets that the Iran war will trigger an oil price shock, the policy outlook for central banks in developing Asian countries is undergoing a shift. Overnight index swaps show significant changes in interest rate pricing across many parts of Asia. The changes are most notable in India and the Philippines, where the market now expects rate hikes instead of cuts; while Thailand and Indonesia are still expected to cut rates, the probability of such moves is rapidly decreasing. Selena Ling, Head of Research at OCBC Bank, said on Friday: “Given that the Iran conflict may persist, Asian central banks will remain highly sensitive to oil price trends and may closely monitor whether there is still room for monetary policy easing in the short term.” CPI growth in Indonesia and the Philippines accelerated in February and is expected to rise further in the future. Both countries are highly dependent on imports for fuel supply, and the weakening of their local currencies has further pushed up import costs. Investors are also preparing for higher interest rates in Malaysia, whose economic growth is among the fastest in the region. Even in Thailand, where inflation has been in negative territory for nearly a year, the Ministry of Commerce has warned that as the Middle East conflict pushes up food and fuel prices, this indicator may start to rebound from this month.