The ceasefire-driven rally of Asian currencies, including the Philippine peso, may be short-lived as global oil risks linger, according to Singapore-based Oversea-Chinese Banking Corp. Ltd. (OCBC).

In an April 9 report, OCBC Group Research foreign exchange (FX) strategists Sim Moh Siong and Christopher Wong noted that regional currencies rebounded strongly after United States (US) President Donald Trump announced a two-week ceasefire in the war against Iran.

In particular, currencies of net oil importers such as the Philippines, India, South Korea, and Thailand led the overnight gains.

To recall, the peso strengthened by a hefty 90 centavos against the US dollar last Wednesday, April 8, closing at an almost one-month high of ₱59.43.

The local currency quickly moved past the ₱60:$1 level following the ceasefire announcement, reversing recent losses that had weakened the peso to record lows nearing ₱61 versus the greenback last week.

“Lower oil prices help via a smaller import bill, some easing in near-term inflation pressure, and improved sentiment as the war premium fades,” OCBC noted.

However, OCBC cautioned that “at this point, we would still frame this as more of a tactical reprieve than a full reversal,” citing that shipping through the Strait of Hormuz is still disrupted, repairs to damaged infrastructure will take time, and the ceasefire remains fragile as negotiations continue.

“While Asian FX could partially recover their recent losses, the extent of any rebound will still depend on whether oil prices stay meaningfully lower, whether FX reserves stabilize, and whether portfolio inflows begin to return,” the Singaporean bank said.

“More broadly, oil is only one part of the equation. A more durable recovery in Asian FX still requires a softer US dollar, less adverse yield differentials, and steadier portfolio flows to recover,” it added.

In another April 9 report, MUFG Global Markets Research senior currency analyst Michael Wan noted that barely a couple of days into the ceasefire, “it seems there are already cracks forming, even as financial markets remained relatively buoyant, with a weaker dollar and stronger Asian currencies holding up as well so far.”

Despite buoyant financial markets, MUFG believes the real concern is weak physical oil flows through the Strait of Hormuz, where traffic remains below normal.

The Japanese financial giant flagged major gaps between negotiating parties, such that the likelihood of a lasting ceasefire is seen as low, keeping the risk of renewed conflict and market volatility high.

“As such, we continue to advise taking a cautious stance on risk despite the current buoyancy in financial markets, and for our clients if possible to take opportunities to hedge some of positions at current better levels especially against more vulnerable emerging-market (EM) currencies in our region such as the Indian rupee, Philippine peso, Thai baht, and South Korean won,” MUFG said.