“Those Asian ex-Japan central banks perceived to be behind the curve could further be marginalized, for instance TWD and THB.”įed Bank of Richmond President Thomas Barkin said the central bank should raise rates as fast as it can without causing undue harm to financial markets or the economy. “Ongoing global growth concerns, inflation worries and fears of tighter financial conditions continue to keep a leash on risk appetite,” said Christopher Wong, senior FX strategist at Malayan Banking Bhd. The yen tumbled to a fresh 24-year low of 136.71 per dollar on Wednesday as the Bank of Japan’s ultra-loose policy contrasts with the Fed’s hawkish bias. The currency still continues to linger near the weak end of its 7.75-to-7.85 per greenback trading band.Īnd it’s not just developing Asian currencies which are feeling the heat. Over in Hong Kong, the monetary authority has bought HK$78.1 billion ($10 billion) of the local dollar so far this month, including its HK$20.8 billion purchase on Tuesday. The South Korean won slid to a 13-year low of 1,297.85 to the greenback. The Indian rupee declined to a record low of 78.29 per dollar while the peso dropped as much as 0.7% to 54.635, its weakest level since November 2005. He has indicated that another 75 basis-point hike, or a 50 basis-point move, was likely at the next review in July.
The next cue may come from Fed Chair Jerome Powell when he delivers his semi-annual testimony on monetary policy to Congress on Wednesday. “Downward pressure on currencies where central banks are behind the curve in managing inflation will increase, particularly as the Fed keeps hiking aggressively.”
“Central bank rate signals are becoming a bigger driver of Asian currencies,” said Eugenia Victorino, head of Asia strategy at Skandinaviska Enskilda Banken AB in Singapore. Idiosyncratic factors such as a widening current-account deficit for the Philippines and geopolitical risks for South Korea are adding to the pressure. Regional currencies have been caught out by the Fed’s hawkish bias, which stands in contrast to the more patient policy stance adopted by Asian central banks. Hong Kong’s de facto central bank bought the local dollar at the fastest pace on record this month to prevent it from crossing the weak end of the trading band. India’s rupee declined to an all-time low while the Philippine peso slumped to its weakest level in more than 16 years. The Supreme Court Has Just Eroded First Amendment Law Stocks Pare Gains After Powell Restates Promise: Markets Wrap Liz Cheney Is Paying the Price in Her Home State for Crossing Trump Switzerland Imports Russian Gold for First Time Since War The World’s Bubbliest Housing Markets Are Flashing Warning Signs
(Bloomberg) - Asian currencies fell on Wednesday, highlighting the pressure wrought by a stronger dollar as the Federal Reserve races ahead with interest-rate hikes.