BNY’s Geoff Yu says Iran-linked energy shocks are pressuring APAC payments, steering MYR, THB, AUD, PHP flows

Four weeks into the Iran conflict, APAC faces balance-of-payments stress driven by mineral fuels and energy by-products, pressuring MYR, THB, AUD and PHP; the Philippines' current-account deficit widened to 4.2% of GDP in Q4 2025 and Thailand inflation was 1.8% in Feb 2026. Recommended trades: use options to short PHP vs TWD and buy puts on MYR and THB vs USD as implied volatility remains elevated above five-year averages. AUD is less clear after January 2026 strength in processed-goods exports, so underweight AUD is no longer an obvious trade.

Analysis

The cleanest way to trade this episode is regional isolation rather than a broad dollar blanket: North Asian FX and equity exporters (high reserve, high value-add) are positioned to absorb energy-driven import shocks better than Southeast Asian and Australian import-reliant corridors. Second-order supply shocks — notably helium (industrial cryogenics/semiconductor fabs, MRI capacity) and urea (fertilizer, food prices) — create persistent non-energy import bills that can widen current-account deficits by 1-3 percentage points of GDP over 6–12 months for exposed countries, amplifying FX stress beyond crude price moves.

Key near-term catalysts that will flip sentiment are identifiable and relatively fast-moving: a coordinated SPR release or a sustained >15% retreat in Brent over a 30–60 day window would likely compress FX implied vols and unwind many option premia; conversely, escalation risks or a multi-week refinery outage in APAC would steepen terms-of-trade losses and push CDS/peso/baht vols materially higher. Political responses (fuel rationing, temporary capital controls, targeted subsidies) are the highest-probability transmission channel from trade shock to market flows and can show up inside a single monetary policy meeting cycle (~1–3 months).

Trade implementation should therefore favor asymmetric, capped-loss structures that isolate intra-Asia pairs while hedging headline-dollar moves. Use 3–6 month call options on USD/MYR and USD/THB (long calls = payoff if local FX weakens) sized to 0.5–1.5% of NAV per position, and a 6–12 month TWD/PHP long (OTC call spread) to play North Asia resilience vs Philippine external strain. For AUD, replace directional shorts with short-dated call spreads to capture mean-reversion if processed-goods export recovery continues, keeping gross exposure elastic to a single energy-catalyst reversal.

Key Decisions for Investors

• Long TWD/PHP (6m OTC call spread): Buy 6m TWD/PHP call (ATM) and sell 6m call 2–3% OTM to finance premium. Target 15–25% payoff if PHP weakens 8–12% vs TWD; max loss = net premium (~0.5–1.0% NAV). Unwind if Philippines 4q CAD improves by >1% GDP or Brent drops >15% in 60 days.
• Buy USD/MYR and USD/THB calls (3m ATM, size 0.5–1.0% NAV each): Long 3m USD/MYR and USD/THB calls to profit from MYR/THB depreciation (protects against local FX stress). Expect to pay elevated premia (implied vol > 5yr avg); target asymmetric payoff >3x premium if local FX moves 8–12%. Stop-loss: close if implied vol collapses >40% or Brent falls >15% in 30 days.
• Trim AUD short exposure and buy 3m AUD/USD call spread (buy ATM, sell 2–3% OTM): Replace 50% of outright AUD shorts with this spread to cap cost and participate in recovery from improving processed-goods exports. Max loss = net debit (~0.25–0.75% NAV), target 2–4x premium if AUD rallies 4–7% within 3 months. Close if Australian refined fuel disruptions re-emerge or commodity export indicators weaken.
• Macro tail hedge: Allocate 0.5% NAV to 9–12m out-of-the-money global energy volatility or crude call options (WTI/Brent): This pays off if escalation drives a >30% crude spike, protecting regional FX longs/credit exposure. Expect low hit-rate but high payoff; set rule to re-evaluate allocation after any coordinated SPR/strategic diplomatic announcement.