Iran War Splits Global Currencies into Winners and Losers

Currencies across emerging markets have diverged sharply since the outbreak of the Iran war, with oil prices reshaping the global financial landscape and pushing exporters and importers onto opposite paths.

As crude surged from around $65 to nearly $100 per barrel, oil-exporting economies such as Kazakhstan, Colombia, and Brazil saw their currencies rally, buoyed by stronger export revenues and improved trade balances.

In contrast, major oil importers, including Philippines, Thailand, and India, have faced mounting pressure. Rising energy costs have inflated import bills and driven demand for the U.S. dollar, weighing heavily on their currencies.

The divergence underscores a fundamental dynamic: higher oil prices effectively transfer income from consuming nations to producing ones. Currency movements have mirrored this shift, tracking changes in trade balances with notable precision.

The scale of gains and losses has also reflected the magnitude of each country’s exposure. Exporters with larger improvements in trade balances have posted stronger currency appreciation, while importers facing steeper energy burdens have suffered deeper declines.

Among the hardest hit is Egyptian pound, which has weakened more than its oil exposure alone would suggest. Analysts attribute this outsized decline partly to Egypt’s geographic proximity to the conflict zone, amplifying investor caution and capital outflows.

Meanwhile, Russian ruble has underperformed relative to expectations for a major oil exporter, likely reflecting ongoing attacks on Russia’s energy infrastructure that have tempered the benefits of higher crude prices.

Analysts estimate the effect of oil price increases on current accounts using trade data from the United Nations Comtrade database, factoring in both crude and refined products. Their baseline assumes oil averaging $100 per barrel in 2026, with import volumes declining modestly as prices rise.

While oil is not the sole driver of exchange rates, it remains the dominant force shaping currency movements in the current environment. As the conflict continues, emerging market currencies are likely to remain highly sensitive to shifts in energy markets, leaving investors navigating an increasingly polarized landscape.