Investing.com — Most Asian currencies firmed on Thursday, with the Australian dollar posting a strong gain after Reserve Bank Governor Michele Bullock said the bank will not hesitate to raise rates further to curb inflation .
The Japanese yen also strengthened, stabilizing after falling the previous session, as Bank of Japan data reiterated the bank’s hawkish rhetoric despite recent comments from BOJ officials downplaying the prospect of rate hikes.
Broader Asian currencies found some strength as the dollar retreated on lingering worries about a US recession and falling interest rates. But fears of a slowdown in growth also limited interest in risk-driven assets.
The and both fell 0.2% in Asian trading.
The Australian dollar rises as Bullock threatens interest rate hikes
The Australian dollar was the best performer in Asian markets, up 0.7%.
The gains in the Aussie came after RBA Governor Bullock said the bank will not hesitate to raise rates due to more upside risks to inflation.
The central bank had kept interest rates steady at a meeting earlier this week but had presented aggressive rhetoric in the face of persistent inflation.
But with Bullock explicitly threatening more rate hikes, traders saw such an opportunity in Aussie prices, helping the currency.
Japanese Yen Companies Amid BOJ-induced Volatility
The Japanese yen firmed on Thursday after suffering steep losses in the previous session. The pair fell 0.2% to around 146.36 yen.
The pair had seen wild swings in recent sessions, initially falling to 141 on safe-haven demand, while the BOJ raised rates this year and signaled further gains.
The yen then retreated after some BOJ officials downplayed the central bank’s aggressive rhetoric on Wednesday.
But a summary of BOJ members’ views released Thursday showed that several policymakers were in favor of raising rates further, and saw rates reaching neutral levels with a 1% economy, which implies an increase of at least 75 basis points from current levels. .
Despite the yen’s recent volatility, the currency still had a great recovery over the past month as it also benefited from an expiring carry trade.
Broader Asian currencies edged higher. The Chinese yuan pair fell 0.2% after a series of stronger-than-expected midpoint fixes. This helped the currency bounce back against mediocre trading data released on Wednesday.
The Singapore dollar pair fell 0.2%, while the South Korean won pair rose 0.2%.
The Philippine peso fell 0.4% after gross domestic product data showed the economy grew as expected in the second quarter.
The Indian rupee pair remained near record highs above 84 rupees and moved little after yields remained unchanged as expected.
