Investing.com — Most Asian currencies were subdued on Friday as the dollar strengthened ahead of a Federal Reserve interest rate decision next week, while disappointing stimulus signals from a top-level meeting in China weighed on the yuan.
Investors remained cautious and avoided making big moves ahead of next week, when rates are widely expected to be cut by 25 basis points. Concerns about longer-term interest rate developments dampened market enthusiasm and boosted the dollar.
The price rose 0.2%, while trading in Asia was 0.1% higher on Friday.
The Chinese yuan falls as CEWC fails to implement any surprise stimulus measures
The onshore pair of the Chinese yuan rose 0.2%, hovering around a two-year high, while the offshore pair was 0.1% higher.
China ended its two-day Central Economic Work Conference (CEWC) on Thursday, but left markets disappointed by the lack of aggressive stimulus measures, which investors had hoped would boost domestic demand.
China has pledged to widen its budget deficit, increase debt issuance and ease monetary policy to support economic growth amid expected trade tensions with the US, according to a CEWC readout in state media. But markets felt the policy was unlikely to deliver the immediate economic momentum needed to counter deflationary pressures from China.
The yuan is under pressure, with consecutive weekly declines in recent months due to looming US tariffs under incoming President Donald Trump. This week the price is expected to be one centimeter lower.
“With our new view on rates, we have become a bit more cautious about the near-term outlook for the CNY. An unwinding of the Trump trade could help the CNY recover, but rate developments could be a catalyst for more depreciation,” ING analysts said in a recent note.
Dollar on track for best week in month, Thai baht leads to loss in Asian currency
The dollar index was poised for its best week in more than a month, even as traders positioned for a Fed rate cut next week. But higher-than-expected and broadly in-line consumer inflation for November led markets to price in a slower pace of rate cuts in 2025.
The Thai baht pair rose 0.8%, while the Indonesian rupiah pair rose 0.3%.
The South Korean won pair rose 0.2%, a day before a planned vote in parliament to impeach the country’s President Yoon Suk Yeol over his attempt to impose martial law in the country to lay.
The Japanese yen pair rose 0.3% after media reports suggested the Bank of Japan was likely to remain unchanged next week, contrary to earlier expectations of a rate hike.
In other regions, the Singapore dollar edged higher, while the Australian dollar was largely unchanged.
The Indian rupee’s pair was muted and remained near a record high on Thursday.
