Asia's $8 trillion in foreign-exchange reserves face unprecedented strain as the Middle East war drives oil prices higher, threatening economies reliant on energy imports. Central banks from Indonesia to Taiwan are deploying reserves to stabilize currencies amid record depreciation risks. Indonesia's Bank Indonesia intervened in offshore and onshore markets this week, while India's central bank offloaded dollars to prop up the rupee after it hit a historic low. China reversed its policy stance, setting a stronger yuan reference rate despite dollar surges. Markets brace for prolonged volatility as oil-linked inflation erodes current account balances—a 10% oil price spike could shrink Asia’s GDP by 0.3 percentage points, per Nomura. Reserve adequacy varies: Thailand and the Philippines are deemed “more than adequate,” while Indonesia and South Korea face “lower” buffers, BNY data shows. Fitch flagged Indonesia’s negative credit outlook amid policy uncertainty. FX interventions highlight a critical truth: central banks’ firepower and timing will determine their ability to halt capital outflows and restore investor confidence.