Investing.com — Most Asian currencies moved from flat to low on Thursday as the prospect of slower US rate cuts in 2025 kept traders off regional markets.
China’s yuan was among the worst performers on the day as purchasing managers’ index data showed support from stimulus measures in recent months was now fading.
Regional trading volumes were still limited as major markets such as Japan remained closed for the New Year holidays.
The dollar remained bullish, benefiting from expectations of a slower pace of Federal Reserve rate cuts in 2025, while protectionist policies under incoming President Donald Trump are also expected to benefit the dollar.
Trading in Asia was little moved but was at its highest level since November 2022.
The Chinese yuan is falling as manufacturing PMIs disappoint
The Chinese yuan weakened on Thursday, rising 0.3% to 7.3190 yuan, the highest level in more than a year.
Data showed the country’s manufacturing sector grew less than expected in December as support from recent stimulus measures dried up.
The figures came just days after data also showed weaker-than-expected growth in the manufacturing sector.
The prints fueled concerns about a slowing economic recovery in China, with recent stimulus measures having provided only limited support. Increased trade headwinds under Trump are also expected to put pressure on the Chinese economy, although Beijing is expected to hand out more fiscal stimulus to offset this trend.
Asia FX faces losses in 2024
Most Asian currencies held steady on Thursday after mostly experiencing losses in 2024. Much of these losses also came in recent months, when the prospect of slower rate cuts and more protectionist US policies largely left traders favoring the dollar.
The Japanese yen bore the brunt of this trading as the Bank of Japan’s largely dovish 2025 outlook added to pressure on the currency. The yen pair moved little on Thursday after rising to a five-month high of nearly 158 yen in recent sessions.
The South Korean won firmed on Thursday but was among the worst-performing Asian currencies in 2024. The won pair rose by almost 15% in 2024, with increased political unrest in the country increasing pressure on the won.
The Singapore dollar pair fell 0.2% on Thursday, benefiting from the gross outcome that showed the economy growing 4% stronger than expected in 2024.
But growth slowed sharply in the fourth quarter, casting doubt on the island nation’s economic prospects in the coming quarters.
The Australian dollar pair rose 0.5% after falling to its lowest in over a year, while the Indian rupee pair fell 0.3% after hitting a record high of 86 rupees this week reaches.
