BENGALURU: The Malaysian ringgit and Indonesian rupiah led declines among Asian currencies on Monday, as fears that Israel’s war on Hamas could spread and the prospect of higher-for-longer US interest rates kept investors away from riskier assets.

US 10-year Treasury yields crept to within a whisker of 5.0%, pushing borrowing costs up across the globe and testing equity valuations.

The rupiah fell 0.5% and was still at its lowest level since April, 2020 whereas the ringgit dragged 0.3%.

Indonesian 10-year benchmark yields were up 7 basis points at 7.235%.

Stock markets in both the countries dropped as well, with shares in Malaysia and Indonesia down 0.1% and 1.5% respectively.

Oil prices eased more than $1 on Monday but are still up 10% over 10 days largely due to worries of a wider confrontation in the oil-rich Middle East.

Rising oil prices is a headache for Asian oil importers, like South Korea, Thailand and Japan.

The Indonesian central bank unexpectedly raised rates last week to contain the decline in the rupiah with economists eyeing further policy tightening if the currency continues to weaken.

Goldman Sachs analysts said in a note: “Bank Indonesia has shown an increased sensitivity to FX developments and will likely stem the pace of depreciation through their multiple intervention tools.”

Malaysia’s economy grew 3.3% in the third quarter from a year earlier, the statistics department said in a preliminary estimate on Friday.

“The ringgit is weighed down by expectations of higher-for-longer Fed rates, demand for safe-haven USD assets and lingering concerns over contagion risks from China’s property sector,” said analysts at United Overseas Bank.

The dollar index, measuring the greenback’s value against a basket of currencies, rose 0.1% to 106.3.

Asian stocks extended losses. Share markets in China and Philippines fell 1% and 0.7% respectively.

Markets in Thailand were closed for a public holiday.