Short positions on Asian currencies have increased due to the Middle East conflict, which has impacted energy markets and sparked concerns about inflation, current-account strains, and policy constraints across the region. With the conflict in its third week now, investors have turned bearish on the Thai baht for the first time since April 2025. Short positions in the South Korean won and Taiwan dollar also rose to multi-month highs. The shift in positioning reflects a sharp energy shock as the conflict has disrupted shipping through the Strait of Hormuz, sending crude prices above $100 and fuelling inflation fears. The conflict is likely to continue for weeks, making currencies such as the won, rupee and peso more vulnerable. However, the Chinese yuan and Malaysian ringgit have been relatively resilient.