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By Ambar Warrick
Investing. com — Asian currencies fell on Thursday as commitments by Federal Reserve officials to keep rates high despite a moderation in inflation pushed the dollar higher, while the deteriorating expansion outlook for Singapore also weighed.
The Chinese yuan fell about 0. 3%, while the Japanese yen lost 0. 2%. Most other Asian currencies were trading negatively, after posting some gains on Wednesday.
At 23:21 ET (03:21 GMT), the US dollar index rose 0. 2% after posting a 1. 1% loss on Wednesday. Dollar index futures rose 0. 2% after a band of losses.
Minneapolis Fed President Neel Kashkari said that if Wednesday’s weaker-than-expected U. S. inflation report was a positive sign, the central bank would continue to tighten policy until it reached its inflation target, Reuters reported.
Therefore, the target rate could reach 4. 4% by the end of the year. While Kashkari is the Fed’s most aggressive member, others also expect interest rates to continue to rise, albeit at a slower pace.
Stock markets rallied after the report, and investors are now expecting a 50-point base point through the Federal Reserve at its next meeting, which is under initial expectations of a 75-point matrix.
In Asia, Singapore fell 0. 1 cents after the island state cut its annual economic expansion forecast from 3 cents to four cents, from 3 cents to five cents. The country also revised down its second quarterly GDP figure, creating further obstacles due to the weakness of the global economy.
Much of those headwinds come from China, which is Singapore’s largest trading partner. The continental economy is suffering from a series of COVID-19-related lockdowns this year.
The Thai baht remained solid after the central bank raised rates on Wednesday and introduced a financial adjustment.
The baht recovered from this year’s lows, amid a worsening outlook for the Thai economy. The central bank also noted that a modest speed of rate hikes was needed to fight runaway inflation.
The oil slump benefited the Indonesian rupiah, which rose 0. 5%.
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