Dollar strengthened in Asian FX session
2022.12.21 00:45
Dollar strengthened in Asian FX session
Budrigannews.com – The dollar stabilized on Wednesday after a sharp fall against the yen, and the Japanese yen retreated slightly from a four-month high as markets processed the Bank of Japan’s unexpected policy shift.
After gaining more than 3% during the previous session, the decreased by 0.3 percent to 132.06 against the dollar. On Tuesday, the BOJ maintained record-low interest rates while allowing yields on benchmark government bonds to fluctuate, which the market interpreted as a sign that the bank will eventually tighten policy in response to rising inflation.
The yen, which had been battered by a wider gap between and interest rates this year, greatly benefited from this. also reached nearly 0.45%, which is close to the upper end of the BOJ’s new range that was announced on Tuesday.
The dollar index fell nearly 1% on Tuesday, close to a six-month low, as a result of gains in the yen. In any case, the greenback currently seemed to have steadied from late misfortunes, with both the and rising 0.1% on Wednesday.
The majority of other Asian currencies suffered as a result of this and concerns about hawkish central banks in 2023. The shed 0.1%, while the and the each shed approximately 0.3%. Due to the BOJ’s decision, which suggests more hawkish actions by the world’s second-largest central bank, most regional units also fell on Tuesday.
On Tuesday, the maintained its key lending rate for a fourth consecutive month, despite a 0.1% decline. The Chinese government is having trouble finding the right balance between containing the yuan’s further decline and accommodating economic growth.
Asian markets were weighed down by uncertainty regarding China’s COVID situation, as the largest economy in the region is facing an overwhelming increase in infections following the easing of several movement restrictions earlier this month. Despite the fact that analysts anticipate an eventual economic recovery as a result of the reopening, they have cautioned against near-term volatility due to the rise in infections.
Markets feared that hawkish central bank actions and rising inflation would severely impede economic growth in the coming year, which would result in a global recession in 2023. This also kept appetite for Asian currencies subdued.
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