• Notification Date: 28-12-2024
• Notification No: N/A

Asian currencies struggle as South Korean won slips amid political crisis, yen gains on rate hike hopes

Asian currencies felt a squeeze on Friday as South Korea's won fell on fears of deepening political crisis while a slight rise in Japanese yen was reported on speculations of an imminent interest-rate hike from the BoJ. The US Dollar Index is at near a two-year high, showing further sustained strength out of the Federal Reserve's hawkish stance.

South Korea's currency, the won, fell 0.7 percent against the dollar after a highly volatile week amid political instability. Acting President and Prime Minister Han Duck-soo will face an impeachment vote, and this move will heighten concerns over democratic stability in South Korea. The currency will lose almost 2.5 percent for the week reflecting investor anxiety over the political crisis.

Meanwhile, the Japanese yen gained against the dollar after Tokyo reported inflation data for December stronger than it had expected, increasing anticipation of a possible rate hike by the BoJ. Some policymakers at the BoJ said conditions might be set in the near term for monetary policy tightening. The gain for the yen was minor since the USD/JPY fell 0.3%. The dollar had the continued strength while rupee and the peso for that matter kept falling through. Indian rupee at an all-time low reached it against the dollar over a week back and, yet again, the graph moved downward. The rise for the USD/INR was recorded at 0.2% to 85.713 rupees.

Despite some positive economic data from China, including a slower-than-expected contraction in factory output and industrial profits, the Chinese yuan remained largely muted against the dollar. With the Fed’s tight policy outlook, most Asian currencies are poised to end the week on a weaker note.