Investing.com — Most Asian currencies were lower on Thursday as the dollar held steady near a two-year high while the Indian rupee fell to an all-time low.
On Wednesday, most markets in the region were closed for Christmas.
The price was largely stable, while the price was lower in Asian trading on Thursday.
Asian currencies weakened sharply last week after the Federal Reserve forecast fewer interest rate cuts through 2025 amid concerns about persistent US inflation.
The Indian rupee hits a record low, while the dollar remains near a two-year high
The Indian rupee fell to an all-time low against the US dollar, with the pair hitting a record peak of 85,497 rupees on Thursday with a decline of 0.2%. The couple had crossed the Rs 85 mark last week.
The onshore pair of the Chinese yuan rose on Thursday. Chinese authorities have decided to issue a record 3 trillion yuan ($411 billion) in special government bonds next year, in an intensified fiscal effort to stimulate a struggling economy, Reuters reported on Tuesday.
The Singapore dollar pair rose 0.1%, while the Australian dollar pair fell 0.2%.
The South Korean won pair rose 0.4% while the Philippine peso fell more than 1%, bucking the regional trend.
The US dollar has shown remarkable strength in recent months, supported by a combination of domestic and global factors.
One of the most important factors is the Federal Reserve’s monetary policy stance, which, despite previous rate cuts, has shifted to maintaining higher interest rates through 2025, with forecasts of only two cuts.
In addition, expectations of possible tariffs under the incoming administration of Donald Trump have led to predictions of higher inflation and robust economic performance, further increasing the dollar’s appeal.
With expectations for the dollar remaining strong, the outlook for Asian currencies has become bleaker amid global uncertainties.
The Japanese yen fell due to interest rate hikes
The Japanese yen pair remained largely unchanged on Thursday.
Japan’s government is preparing a record $735 billion budget for the fiscal year starting in April, driven by rising social security and debt servicing spending, according to a draft obtained by Reuters.
BoJ Governor Kazuo Ueda said on Wednesday that the economy is expected to make progress towards sustainably reaching the central bank’s 2% inflation target next year, suggesting a rate hike could be on the horizon.
The Bank of Japan ended negative interest rates in March and raised short-term rates to 0.25% in July. The country has indicated that it is prepared to further increase rates if wage and price developments are in line with forecasts.
