Asian stock markets see steepest fall since 2008, currencies down amid Iran war impact

Emerging Asian shares were on track for their steepest monthly fall since the global financial crisis, and currencies wallowed around multi-year lows as the US-Israel war on Iran kept oil prices above $100 a barrel and deepened pressure on energy-importing economies.

The MSCI gauge of emerging Asian equities slumped 14 percent in a turbulent March, its biggest monthly loss since October 2008 at the height of the crisis.

The broader MSCI emerging markets index was set for its steepest monthly loss in six years, down more than 13 percent.

South Korea's KOSPI index lost 19.1 percent in March, its worst monthly decline since October 2008, and the won sank to a 17-year low of 1,536.30 per dollar. The currency was also the worst regional performer in the first quarter of the year.

Meanwhile, the Indonesian rupiah touched a new lifetime low of 16,998 on Tuesday, but stopped just short of breaching the key 17,000 per dollar level.

"If oil prices are $30-$35 a barrel higher, it means that the balance of payments fundamentals for a lot of currencies in Asia have meaningfully shifted, and that requires an adjustment higher in the FX levels of these currencies," said Abbas Keshvani, Asia macro strategist at RBC Capital Markets.

"Dollar demands have gone up across the board for most of Asia, and this is going to be a slow bleed for a lot of these energy-importer currencies."

The MSCI EM currencies index has lost about 3 percent in March, its worst month since September 2022.

Foreign investors have been pulling out of the region at a record pace, with South Korea and Taiwan logging outflows of 31.91 trillion won ($20.80 billion) and $27.60 billion, respectively, in March, exchange data showed. South Korea's outflows were the most since at least April 2010.

Taiwan shares dropped more than 10 percent in March.

In Indonesia, equities were set to end the month over 14 percent in the red, with foreign outflows totalling 22.06 trillion rupiah ($1.30 billion) in March, the highest since at least 2010, according to LSEG data.

The Philippine peso hovered around 60.733 a dollar after sinking to its lifetime low of 60.814. Stocks in Manila slipped marginally on the day, but were set to end the month around 10 percnt in red - their worst showing since September 2022.

In India, the rupee closed March at 94.83 on Monday after briefly crossing the 95-per-dollar level to a record low.

Indian markets were closed for a local holiday.