Asia FX Suffers from Weak economic Data
2023.03.02 03:03
Asia FX Suffers from Weak economic Data
By Kristina Sobol
Budrigannews.com – On Thursday, sentiment was shattered by a wide range of weak regional economic data and rising fears of a more hawkish Federal Reserve, which led to an overnight spike in Treasury yields.
Beliefs that interest rates will continue to rise for an extended period of time were stoked by new evidence of persistent inflation in the world’s largest economies.
Even though China’s economy grew at its fastest rate in more than a decade, this largely dampened optimism about a recovery.
Was one of the day’s worst performers, sharply declining from a 1% rally in the previous session. The yuan lost about 0.4 percent against the dollar.
This week’s focus is also on a meeting of high-ranking Chinese officials, which could change government policy on a larger scale.
The and also lost 0.3 percent and 0.5 percent, respectively, following recent gains in other China-exposed currencies.
Despite signs of a strong recovery in China, weak economic readings also painted a negative picture for Asian markets as a whole.
According to data from South Korea, the country’s decline in January was greater than anticipated. However, production from the previous month suggests that a bottom may be near.
The country remained stable despite a decline in business profits in the fourth quarter, as evidenced by data, which showed a 0.2% decline. However, despite the possibility of some strength in the fourth quarter, the reading also suggests elevated inflation in the near future.
After data revealed that the country’s declined significantly more than anticipated in January, the number of Southeast Asian currencies decreased by 0.5%. During the month, Thailand’s also widened more than anticipated.
As a result of the unexpected rise in U.S. data in February, concerns that inflation was back on an upward trend were raised. Short-term yields reached 16-year highs on bets that U.S. interest rates will remain higher for a longer period of time, which led to an increase in U.S. Treasury yields following the reading.
After suffering significant overnight losses against a basket of currencies, the dollar held its ground on Thursday. The and both increased by approximately 0.1 percent, remaining close to near two-month highs.
As the gap between risky and low-risk debt narrows, rising interest rates in the United States bode ill for Asian currencies.
