Asian currencies under pressure due to U. S. China conflict
2023.03.07 02:45
Asian currencies under pressure due to U. S. China conflict
By Kristina Sobol
Budrigannews.com – On Tuesday, most Asian currencies traded in a narrow range due to worries about rising tensions between the United States and China. Meanwhile, the dollar fell due to bets that Federal Reserve Chair Jerome Powell would speak less hawkishly later in the day.
after being told that a conflict with the United States could get worse if Washington doesn’t change how it talks about China, the stock dropped 0.1%.
His remarks shook public opinion about China, partially compensating for data showing that the nation recorded a in February. However, concerns about a sluggish economic recovery in the nation were raised by a larger-than-expected decline in Chinese and a weak GDP forecast for 2023.
The general range of Asian currencies remained narrow, with the falling 0.1%. According to the data, Japan’s economy significantly slowed in January, reducing pressure on the Bank of Japan to tighten its ultra-loose policy.
Even though the and said it would tighten policy even more to fight inflation, the fell 0.2 percent. However, the bank also said that Australia’s inflation had probably reached its highest point, which could mean that the bank’s rate hike cycle will eventually slow down.
With a drop of 0.4 percent, the suffered the most losses in Southeast Asia, while the was muted and read lower than expected for February.
Following a reading that was lower than anticipated, the also traded sideways.
Some bets that Fed Chairman Powell’s recent cooling of the U.S. economy could result in a less hawkish stance during a meeting that begins later on Tuesday led to overnight losses for the dollar against a basket of currencies.
Both the and suffered significant losses from the previous week, falling 0.1% each. Even though an inversion in the remained, yields on U.S. Treasury bills decreased even further overnight.
Given that the economy’s resilience and persistent inflation have raised concerns about a more hawkish Fed, it is generally agreed that Powell will provide additional clues regarding monetary policy in the upcoming months.
However, under the yoke of high and, U.S. economic activity was also seen cooling, with a further contraction in February.
As the gap between risky and low-risk debt narrows, rising U.S. rates bode poorly for Asian currencies. Through 2022, the trend had harmed Asian markets.
