Investing.com — Most Asian currencies held steady Friday after sharp gains in the previous session, while the dollar suffered some losses after the Federal Reserve cut interest rates as widely expected.
Regional currencies recovered much of their weekly losses following the Fed’s move, with some even turning positive for the week. The dollar, on the other hand, fell from a four-month high, with some traders also holding on to recent gains.
The focus was also on more signals of fiscal stimulus from China as a meeting of the Nation People’s Congress entered its final day.
Dollar nurses fall from a four-month high after a Fed rate cut
The and both were steady in Asian trading, down from a sharp decline on Thursday after the Fed to a range of 4.50% to 4.75%.
The dollar had risen to a four-month high earlier in the week after Donald Trump won the 2024 presidential election, with Trump’s policies potentially heralding persistent long-term inflation.
The Fed said a change in U.S. leadership is unlikely to impact monetary policy in the short term. Chairman Jerome Powell indicated that the economy is in good shape and that the bank is likely to ease policy further in the coming months.
Traders were pricing in a 76.5% chance that the Fed would cut rates by 25 basis points in December, and a 23.5% chance that rates would remain unchanged, it showed.
Chinese Yuan Vulnerable with NPC in Focus
The Chinese yuan, which was among the hardest hit by the strong dollar this week, weakened slightly on Friday, with the pair rising 0.2%. The pair is also expected to rise 0.4% this week.
The focus was squarely on the NPC meeting, which concludes on Friday, for more clues about Beijing’s plans to roll out fiscal stimulus.
Analysts expect the government to approve at least 10 trillion yuan ($1.6 trillion) in new spending in the coming years. The NPC meeting comes after Beijing announced a slew of stimulus measures over the past month, but did not specify their timing or size.
Broader Asian currencies mainly weakened on Friday, but posted strong gains from the previous session following the Federal Reserve’s rate cut.
The Japanese yen was an outlier, with the pair down 0.2% and further from a three-month high after Japanese ministers issued new verbal warnings about possible interventions in the currency market.
The Australian dollar pair fell 0.4% but was on track for a weekly gain of almost 2%. The South Korean won pair rose 0.4%, while the Singapore dollar pair rose 0.1%.
The Indian rupee was a major laggard this week, with the pair rising to record highs above 84.4 rupees. The pair stayed close to these highs on Friday.
