Asian Currencies Strengthen on Asia FX
2023.02.23 01:21
Asian Currencies Strengthen on Asia FX
By Kristina Sobol
Budrigannews.com – The won appreciated sharply despite the Bank of Korea holding interest rates after 18 months of hikes, as the dollar saw some profit taking and the majority of Asian currencies recovered some of their recent losses.
Despite the Bank of China (BOK) putting an end to a rate-hike cycle that began in late-2021, the gained 0.6 percent and was the best-performing Asian currency for the day.
However, Governor Rhee Chang-yong of the BOK suggested that the bank might raise interest rates even higher in order to restrain runaway inflation, which is close to levels seen during the Asian financial crisis of 1998.
As a result of a slowdown in Chinese demand and rising inflation, South Korea’s economic growth has been hampered by the BOK’s pause.
The dollar saw some profit taking as other Asian currencies advanced. The and both fell about 0.2 percent, but they remained close to their seven-week highs.
and each added 0.1 percent, while risk-averse Southeast Asian currencies increased between 0.1 percent and 0.4 percent.
Traders blamed some government intervention in foreign exchange markets for the 0.6% increase. On the basis of a deteriorating outlook for the economy of Taiwan, the currency lost value in recent weeks.
On Wednesday, the Federal Reserve’s February meeting revealed that the majority of the committee’s members wanted to increase interest rates, albeit at a slower rate. However, given that data released following the meeting demonstrated that that remained sticky in January, Fed members may call for a return to larger interest rate increases in the upcoming months.
As the gap between risky and low-risk debt narrows, rising interest rates bode poorly for Asian currencies. Despite the fact that the majority of regional central banks increased interest rates to keep up with the Fed, their currencies still struggled against a strong
Now, the Fed’s preferred inflation gauge and a revised reading that is due later in the day are the main topics of discussion. The Federal Reserve has more leeway to keep raising interest rates if the U.S. economy shows signs of strength.
Most people think that the PCE data will show that inflation stayed high through January.
