Most Asian currencies weakened on Tuesday as Middle East tensions spiked, with the U.S. dollar nearing a five-week high. The South Korean won and Indian rupee led regional declines, reflecting vulnerability to rising oil costs and trade deficits. Meanwhile, the Chinese yuan edged higher as the People’s Bank of China set a stronger midpoint at 6.9088 yuan, its most aggressive adjustment in six months.

Offshore yuan trading followed with a modest 0.3% dip after two days of gains. Japan’s yen also softened, falling 0.1% as fragile risk appetite persisted despite an 0.8% overnight rally. Energy market volatility dominated, as Tehran threatened to block the Strait of Hormuz, a critical chokepoint for 20% of global oil shipments. U.S. officials warned the military campaign could last “some weeks”, deepening uncertainty over Iran’s leadership transition after Ayatollah Ali Khamenei’s death.

Net energy importers like South Korea and India face heightened inflation risks, amplifying pressure on their currencies. The U.S. Dollar Index Futures rose 0.3%, reinforcing its safe-haven status amid geopolitical uncertainty.