It’s pretty obvious why but a nice summary comes from Credit Suisse. The most important take-out is that AUD is not an oil currency. It is a coal currency. Only so long as oil and gas shortages support coal (and iron ore) prices will the AUD benefit.
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Amid the negative change in risk sentiment since Russian troops invaded Ukraine on 24 February, KRW and INR have been the worst-performing Asian currencies. Meanwhile USDIDR, traditionally a high-beta EM FX pair, has been remarkably stable. In the G10 space AUD has also been resilient. In our view, the relative outperformance of these energy commodity currencies shows that recent market moves have been driven by worsening commodity shortages as Western countries impose sanctions on Russia, rather than by a USD liquidity squeeze.
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