Asian Currencies Experience Decline, USD Strengthens
Most Asian currencies saw a retreat on Wednesday, particularly the Japanese yen which hit its weakest level since 1990. This was due to the dollar gaining strength ahead of upcoming cues on inflation and the Federal Reserve’s announcements later in the week.
Trading Volumes and Holiday Prep
Trading volumes were relatively low as market participants prepared for the upcoming Good Friday holiday.
USDJPY Climbs to 1990 Highs
The yen weakened on Wednesday, with the USDJPY pair reaching 151.97- its highest level since the mid-1990s. This decline was initially sparked by comments from BOJ board member Naoki Tamura hinting at a slow and steady approach towards policy normalization.
While the yen faced pressure, concerns of government intervention in currency markets limited further losses. Japanese officials indicated readiness to take action to prevent excessive currency depreciation.
Chinese Yuan Struggles, USD Strength Continues
Meanwhile, the Chinese Yuan remained fragile, with the USDCNY pair crossing the 7.2 level. Sentiment towards China remained negative, impacting the currency despite efforts from the People’s Bank of China to stabilize it.
USD Gains Momentum
The dollar continued to rise, with USD and USDJPY pairs extending their gains in Asian trade. This was supported by dovish signals from other central banks and anticipation of key economic data and Fed speeches.
As the dollar strengthened, most Asian currencies weakened, including the South Korean won, Singapore dollar, Indian rupee, and Australian dollar.
The Indian rupee, in particular, remained near record lows against the dollar, while the Australian dollar faced pressure after subdued retail data for February.
