Asia FX Rattled by China COVID Fears, Dollar Steadies
2022.11.07 00:06
© Reuters.
By Ambar Warrick
Investing.com– Most Asian currencies fell on Monday as the dollar steadied from recent losses, while concerns over China’s commitment to the zero-COVID policy and more weak economic data from the country dampened sentiment towards the region.
was the worst performer among its peers, falling 0.4% to 7.2131 against the dollar, while the slumped 0.6% to 7.2176 per dollar. The currency tumbled after Chinese health officials , dispelling recent speculation over a potential withdrawal of the policy.
Chinese economic growth slowed sharply this year due to headwinds from COVID lockdowns. This trend is now expected to continue in the coming months, as the country faces its worst outbreak since May.
Data also showed that China’s massive grew less than expected in October, while both and also shrank during the month. The reading bodes poorly for Asian markets, given that China is a major trading partner for the bulk of the region.
slumped 0.6%, given the country’s heavy reliance on China as a commodity market. The shed 0.4%, while the fell 0.3%.
Asian currencies were also pressured by some strength in the dollar, which steadied after sharp losses on Friday. The rose 0.2%, while added 0.1%.
Asian currencies had rallied on Friday after some Federal Reserve officials signaled that they supported a smaller interest rate hike in December to avoid more damage to the economy.
But given that the central bank also signaled that interest rates will peak at higher levels than expected, the outlook for Asian currencies is expected to remain subdued in the coming months. Focus this week will be on for October, which is expected to show that price pressures remained elevated through the month.
In Southeast Asia, the fell 0.3% after data showed grew less than expected in October. While the reading comes as a sign of relief for the Thai economy, it also puts less impetus on the central bank to raise interest rates, which is negative for the baht.
The rose 0.3% after data showed grew slightly more than expected, pointing to some economic tailwinds for Southeast Asia’s largest economy.
