BENGALURU: Emerging Asian stocks and currencies were largely subdued on Wednesday after escalating tensions in the Middle East fuelled concerns of a broader regional conflict, prompting investors to seek refuge in safe-haven assets, including the US dollar.

The Indonesian rupiah declined as much as 0.5% to its lowest level since Sept. 19, while Thailand’s baht slipped as much as 0.4%.

Equities in Jakarta, Seoul, and Kuala Lumpur lost more than 1% each, while shares in Singapore and Manila rose marginally by 0.2% and 0.3%, respectively.

In response to Israel’s actions against Tehran’s Hezbollah allies in Lebanon, Iran launched a series of ballistic missiles at Israel, who in turn promised a “severe retaliation” against its adversary.

The escalation of geopolitical unrest can trigger swift downturns, especially in susceptible emerging markets, while traditionally secure assets such as the US dollar often see a boost in investments.

The dollar index, which measures the currency against six major peers, strengthened about 0.5% to 101.2 overnight, its largest rise since Sept. 25. A stronger-than-expected reading on US job openings also supported the greenback.

Other regional currencies such as the Malaysian ringgit and the Philippine peso were largely flat, last down 0.1% each. The Japanese yen lost as much as 0.4%.

“Our view is that Asian currencies will broadly rise gradually, as we anticipate the US employment rate will not go up significantly and as China’s stimulus impacts on markets will remain positive,” Ryota ABE, an economist at SMBC said.

Following China’s weekend stimulus measures, Shanghai shares had their strongest trading day in 16 years on Monday, as global investors flocked to invest in previously downtrodden Chinese stocks.

Investors are now awaiting inflation figures from the Philippines on Friday, expecting it to determine the pace of future interest rate cuts by the Bangko Sentral ng Pilipinas (BSP).