Oil price uncertainty exchange rate vulnerability and energy dependence in major Asian economies with implications for sustainability transitions

This study aims to investigate how oil price uncertainty affects exchange rate vulnerability in major Asian oil-importing economies, including China, India, Japan, South Korea, and Thailand from 2008 to 2023, which constrain these economies’ capacity to achieve resilient and sustainable transition pathways. The developed three-layer transmission mechanism framework conceptually highlights that energy dependence is a critical structural channel through which uncertainty in oil markets affects macro-financial resilience. By ensuring empirical causality with the Granger causality test, this study evaluates time-varying dependence over the spanning period, focusing on economic events using multi-scale approaches such as DCCA and Wavelet Transform Coherence (WTC). The strong evidence of multiscale dependency indicates that oil price uncertainty generates economic anxiety, intensifies exchange-rate vulnerability, and ultimately influences the prospects for sustainable transition. Furthermore, periods of stronger co-movement coincide with major episodes of global stress, including financial, health, and energy crises, underscoring the event-contingent and internationally transmitted nature of exchange-rate vulnerability. The findings suggest that reducing reliance on imported fossil fuels, diversifying energy sources, and accelerating the deployment of renewable energy can reduce sensitivity to external shocks. These pathways may improve resilience during sustainability transitions to achieve SDG 13, with support from SDGs 8 and 9, by strengthening sustainable economic systems in oil-importing countries.