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The state of FX: Where the currency markets stand now with Wise's FX Lead

Madi Corr

23.03.26

Read time 2 minutes

We sat down with Nathan Solomon, FX Lead at Wise, to answer three frequently asked questions on the FX markets this month.

How have the FX markets moved this month? (Up to 23 March)

FX markets recorded increased volatility in March driven by conflict in the Middle East. Crude and Brent oil prices hit highs of $120/bl in March and price action remains buoyant. The market is pricing in a prolonged conflict leading to elevated oil prices with some predicting north of $150/bl and further inflationary pressures. These expected pressures have already translated into sharp re-pricing on interest rate curves with the Eurozone and UK inverting from cutting cycles to rate hikes where almost 1% pt is priced in by year end. US interest pricing has also inverted from -60bp at the end of February to +20bp currently.

What does all this mean for FX?

We have seen strength in the United States dollar (USD), with the Dollar Index rising >4%, particularly against APAC markets. Over 80% of Asia's energy needs pass through the Strait of Hormuz with some countries more sensitive than others. Most major Asian economies have oil reserves in excess of 3 months, but still without any news of when the conflict will end, local currencies have already experienced strong pressure, despite central bank interventions to slow down the pace of depreciation. Korean won (KRW) has dropped ~5% and Indian rupee (INR) ~3% since the end of February against USD. Net oil importers have been impacted though exporters like Malaysia (MYR) which exports Palm oil have seen their currencies largely unaffected. In Latam, Brazil (BRL) is a major crude oil producer, but it is a net importer of refined petroleum products (such as gasoline and diesel) so depreciation pressures have been neutralised. South African rand (ZAR) is a net importer of both crude oil and finished petroleum products, relying on imports for over 90% of its crude requirements which has translated to a 10% depreciation this month against USD. Chinese yuan (CNY) has been very stable with China having diversified ~60% of its oil imports away from the Middle East in recent years. Pressures have also been seen in countries like Japan (JPY) and the UK (GBP) with fiscal and growth concerns leading to currency weakness and higher longer end rates.

What does this mean for Wise?

We have seen a strong uptick in the pace remittance flows to Asian countries (from GBP, USD, EUR, SGD) as the currency rate makes it more attractive to bring money home. We have seen stronger flows in KRW, Thai bhat (THB) and INR in particular as the market appears to have discounted the central banks being able to hold any particular level. Wise has managed to continue to offer consistency with its guaranteed rate to customers without any restrictions on transaction amounts, despite the volatility and optionality to cancel given to customers. This is largely to the credit and experience in the FX markets team working closely with our Data Science teams along with new strategies and frameworks we have in place to weather storms.

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