• Notification Date: 31-12-2024
• Notification No: N/A

Asian Currencies Dragged Down by Strong Dollar, Yuan Falls as China Factory Growth Slows

Most Asian currencies are falling this year as the US dollar remains strong, which has added to growing unease over global economic conditions and the Fed's policies on interest rates. Asian trading saw the US Dollar Index, which is a little lower at 0.1% but still near its two-year high as expectations of fewer interest-rate cuts come into 2025.

The Chinese yuan also fell as the USD/CNY pair rose 0.2% on Tuesday. In fact, the manufacturing activity of China rose for the third straight month in December. However, it was less than expected, which instead fueled concerns over the economy. Although stimulus measures have been supporting the manufacturing sector, markets are waiting for more details on further fiscal spending plans from Beijing in the New Year.

The yen dropped 0.3 percent in Japan, close to an annual loss of 10 percent against the dollar. The Indian rupee has been the strongest performer this year, rising more than 3 percent against the dollar, after it slid to record lows earlier this month. The Thai baht and Indonesian rupiah rose a little on Tuesday.

Nonetheless, the South Korean won falls deep in decline, badly weakened by local political protests. The USD/KRW pair increased by 0.1%, whereas the won had lost about 6 percent against the dollar so far this month. The crisis in South Korea has aggravated with its court approving the arrest of President Yoon Suk Yeol on charges of fraudulence and misbehaviour in his attempts to impose martial rule.

With Asian currencies going highly under the hammer and nearing the close of 2024, it will be interesting to see where this changing financial landscape heads with a strong dollar and global unpredictability.