Asian currencies slipped at the start of the week, with the dollar standing firm on Monday after Germany’s largest bank reignited fears of a wider banking crisis as the cost of insuring its bonds against the risk of default jumped.

Thailand’s baht depreciated the most in the region, falling 0.3%, with the Philippines peso weakening 0.2% after gaining about 0.7% last week.

Singapore’s dollar and the South Korean won, too, edged lower while the Indonesian rupiah fell about 0.2%, in its second straight session of losses.

“Investors are still feeling cautious about the current banking situation, and therefore we are seeing some ‘risk-off’ sentiment in markets with concerns lingering,” said Josh Gilbert a market analyst for eToro.

Markets globally were roiled as Deutsche Bank’s credit default swaps, a form of insurance for bondholders, shot up to more than four-year highs, highlighting concerns among investors over the health of European banks.

Issues at Deutsche Bank come a week after Swiss authorities oversaw a rescue plan for Credit Suisse, with UBS agreeing to buy its rival, which calmed market nerves for a few days.

In an attempt to restore confidence, a US government body said the country’s banking system was “sound and resilient” despite stress on some institutions, after the collapse of Silicon Valley Bank and Signature Bank earlier in the month.

“The good news for Asian currencies is that the bank issues overseas are unlikely to affect Asia, therefore limited impacts on emerging currencies. Asian banks are far more diverse, with different business models and different risk profiles,” added Gilbert.

Asian currencies decline on Fed rate hike jitters

Adding to the upbeat outlook for riskier emerging Asian assets, analysts at Barclays in a note said, “Resiliency in domestic demand and a faster reopening in China are improving the economic outlook for the region, despite external headwinds.”

In the region, the Bank of Thailand (BOT) is expected to raise interest rates by 25 basis points on Wednesday in what would be its fifth consecutive rate hike, and then hold its policy rate steady until next year in its battle against inflation, a Reuters poll showed.

Unlike its neighbours Malaysia and Indonesia, which have paused their rate hikes despite inflation remaining above target, the BOT has signalled that its tightening cycle is not yet over.

Equities in Asia were mixed, with stocks in Singapore gaining 1%, while shares in the Philippines and Indonesia fell 0.4% and 0.5%, respectively.

Highlights:

** China’s industrial profits slump in Jan-Feb as COVID pain lingers

** Thai PM Prayuth to run for re-election in May

** Philippine c.bank focusing on inflation; exchange rate not a problem