Asian Currencies Weaken as Dollar Steadies
Most Asian currencies experienced a decline on Thursday, while the dollar managed to halt recent losses as the Federal Reserve hinted at maintaining high interest rates in the near term.
Concern Over Weak PMI Readings
Weak purchasing managers index (PMI) readings from Australia and Japan contributed to Asian traders favoring the dollar, as business activity in both countries slowed through February.
Fed Reiterates Rate Outlook
The dollar and yen steadied in Asian trade after retreating from three-month highs this week, with the Federal Reserve signaling no rush to reduce interest rates in the near term. Several Fed officials reiterated a hawkish stance, citing concerns over sticky inflation.
Impact on Asian Currencies
The messaging from the Federal Reserve led to a decrease in expectations for rate cuts in May and June, negatively affecting Asian currencies. The yuan fell 0.1%, while signs of government intervention in currency markets limited larger losses.
Japanese Yen and Australian Dollar Affected
The Japanese yen weakened 0.1% against the dollar, while the Australian dollar remained flat. Weaker-than-expected PMI data impacted both currencies, with markets closely monitoring potential government intervention in currency markets.
Broader Asian Currencies
Other Asian currencies moved in a flat-to-low range, with the Korean won treading water and the Thai baht rising 0.2%. The Philippine peso hovered just below the 83 level to the dollar, with data due later in the day.
