Investing.com — Asian currencies were largely subdued on Tuesday as markets were cautious ahead of interest rate decisions from major central banks, including the U.S. Federal Reserve.
The Fed is expected to cut by 25 basis points on Wednesday, but signals a slower pace of easing in 2025.
Expectations of a slower pace of rate cuts have buoyed the US dollar and created downward pressure on Asian currencies.
The numbers were largely stable in Asia on Tuesday, while slightly higher.
The Asian currency falls in anticipation of regional interest rate decisions
The Japanese yen pair remained largely unchanged. Reuters had reported that the Bank of Japan was likely to remain unchanged this week, contrary to earlier expectations of a rate hike.
The Indonesian rupiah pair rose 0.4% as the country’s central bank is expected to keep its key interest rate steady on Wednesday to support the currency.
The Bank of Thailand is expected to leave its interest rate unchanged on Wednesday after an unexpected rate cut in October.
The Thai baht pair rose 0.2%.
In the Philippines, the peso pair fell 0.1% ahead of the Bangko Sentral ng Pilipinas’ (BSP) on Thursday. The central bank is expected to cut its key policy rate by 25 basis points for the third time in a row.
The dollar is hovering near three-week highs, putting pressure on Asian currencies
The dollar index reversed course, rising slightly and hovering near its highest level since Nov. 26, even as traders positioned for a Fed rate cut next week.
After Wednesday’s rate cut, the ECB indicated a roughly 37% probability of a 25 basis point cut or no further cuts in 2025, compared to around 21% a week ago.
Back in Asia, the onshore pair of the Chinese yuan rose 0.1%. Data on Monday showed China’s growth slowing sharply in November, pointing to persistent weaknesses in consumer spending.
The South Korean won pair fell 0.2% lower amid ongoing political unrest in the country. South Korean President Yoon Suk Yeol was impeached in parliament on Saturday over his martial law decree.
Elsewhere, the Singapore dollar pair rose slightly, while the Australian dollar pair was slightly lower.
The Indian rupee pair rose to a record high of 84,918 rupees.
