(Bloomberg) -- Central banks from Jakarta to Seoul intensified the defense of their currencies, as Asia’s struggle against a resurgent dollar faced a fresh challenge from reports of armed conflict in the Middle East.

Bank Indonesia increased its interventions on Friday to support the rupiah and urged government-backed firms to avoid making huge dollar purchases. The State Bank of Vietnam’s deputy governor said it was ready to intervene in the foreign exchange market “even today if needed.” With the won shy of a 17-month low against the greenback, South Korea pledged to respond immediately to excessive currency market volatility. 

Asian currencies have slid precipitously against the dollar as investors lose hope of imminent reduction to US borrowing costs. Buying of haven currencies, such as the dollar, the Swiss franc and the yen, intensified Friday after Israel launched a missile strike on Iran, according to two US officials, raising fears of a widening conflict across the Middle East. 

“Excessive exchange rate volatility can have implications on policies, inflation and may affect financial market stability,” said Christopher Wong, a currency strategist at Oversea-Chinese Banking Corp. Currencies in the region are “into uncharted territories in light of recent market developments including the geopolitical situation in Middle East,” he said.  

Pessimism toward non-dollar currencies increased after another batch of US economic data surprised to the upside, indicating the economy’s strength may not let up anytime soon. Futures also show investors now expect fewer Federal Reserve interest rate cuts than they did just few months ago. 

“It’s one of those situations where the risk is practically impossible to quantify, so the dynamic is ‘sell first, ask questions later’,” said Kyle Rodda, a senior market analyst at Capital.com in Melbourne. “As the news flow continues to come through and this uncertainty prevails, especially going into the weekend, we’ll see risk positions liquidated.”

The swings have become so severe that the Group of Seven nations issued a statement this week committing to preventing disorderly moves, and China also pledged to avoid excessive volatility in the yuan. But the pressure is most acute for developing economies, some of whom rely on adequate foreign exchange reserves to finance imports of fuel and other goods. 

For most countries in Asia, stockpiles appear adequate, despite heavy spot market interventions. 

India’s rupee was withing striking distance of a record low on Friday, while the rupiah touched a fresh four-year trough against the greenback. 

In an all-out bid to control the currency, Southeast Asia’s biggest economy this week asked state-run enterprises to refrain from making large dollar purchases for its import or debt servicing requirements. Natural-resource exporters were also reminded to comply with rules to repatriate dollar earnings to shore up the nation’s currency reserves.

The government is working with central bank governor Perry Warjiyo to alleviate fallout from the tumbling currency, Finance Minister Sri Mulyani Indrawati said in a Bloomberg Television interview.  

The rupiah’s slump has led to increasing bets that Bank Indonesia will resume interest rate hikes when it reviews monetary policy settings on April 24. 

Indonesia’s “all hands on deck” approach to supporting the rupiah suggests increasing alarm on the part of officials, according to a note by Barclays Plc. 

“The increasingly all-of-government response is revealing a level of concern that implies a higher risk of a larger, 50 basis point hike to 6.50%,” Barclays economist Brian Tan wrote. 

--With assistance from Claire Jiao, Karthikeyan Sundaram, Grace Sihombing and Nguyen Xuan Quynh.

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