USD/CNY, USD/INR, USD/JPY: Asia FX Under Pressure as Mid-East War Fears Escalate

Asian currencies are under broad pressure as escalating Middle East tensions drive risk-off flows and elevate crude oil prices. The PBOC set the USD/CNY reference rate at 6.9223, signaling controlled depreciation amid capital outflow concerns. The Reserve Bank of India conducted unusual after-hours FX intervention on Friday, raising the prospect of chaotic INR trading in the session ahead as markets digest deteriorating geopolitical conditions. Japan has signaled readiness for FX intervention as the yen weakens further, with authorities stepping up verbal warnings. Meanwhile, Australia announced plans to cut taxes on petrol and diesel as part of a National Fuel Security plan, a fiscal response to surging energy costs that could weigh on AUD through widening budget deficits. Oil prices remain elevated with Brent crude near $116 per barrel, amplifying inflationary pressures across the region. Traders should monitor intervention headlines from Tokyo and Mumbai closely, as coordinated central bank action could trigger sharp reversals in USD/JPY and USD/INR. Support for the dollar index remains firm near current levels given persistent safe-haven demand.