The Thursday trading session saw the weak economic data and rising yields become the reason for dragging down the Asian forex currencies.
The trading values of most of the Asian currencies went down and it was due to the sudden surge in the Treasury yields.
On top of that, Asian investors are concerned about the US Federal Reserve and the decisions they are making about interest rates.
The inflation data is still hotter than the Feds had predicted them to be. Therefore, the Feds will continue adding more aggression to interest rate hikes. This would continue pushing the dollar price higher.
The dollar price getting driven higher means that the investors will be investing more in the greenback than any other fiat currency.
With more funds going in favor of the dollar, the rival currencies would eventually face a demise. This is exactly what the Asian currencies are currently facing as they are losing their momentum against the USD.
They are losing their momentum, which is due to the fact that the investors are going after the dollar rather than going for other currencies.
The economic data from the Asian markets are also lowering the confidence of investors in the local currencies. They are also going after the dollar as a hedge fund and this is what is causing the dollar price to move higher.
Despite constant efforts, the US Feds and other countries have failed to bring the inflation rates under control.
Even after increasing the interest rates, the inflation rates have not come under control. They are still on the rise, forcing the Feds to take stricter measures.
The measures mean that the Feds will continue increasing the interest rates.
Hope for the Asian Forex
Even after the recent demise, there are strong chances for the Asian FX to make a return. If not all the Asian currencies, the Chinese yuan will definitely be growing in value in near future.
The latest market data suggests that the Chinese economy has started to recover. The business sector is making a return in China displaying the true resilience of the country in dealing with a major crisis such as the COVID-19 pandemic.
Even the manufacturing sector in the country is returning to its pre-pandemic levels. This holds a lot of significance for the Chinese economy, helping it make a return.
Being the second-largest economy in the entire world, China was expected to make a return, which it finally has. Investors are hopeful that the Chinese economic recovery would help the yuan.
If the yuan improves in value, it will support the rest of the currencies in the Asian forex market.
Performance of Chinese Yuan
Although there is a high chance of the Chinese economy making a recovery, the yuan is still experiencing a downtrend.
Just a day back, the trading price of the yuan was 1% higher than the dollar. However, in the latest session, the trading price of the yuan dipped by 0.4%.
The Chinese government is also determined to show strictness towards the monetary policy to fight of high inflation rates.
The officials of China are to have a high-level meeting where they will decide whether they are to increase the interest rates or not. The government may introduce changes to the policy, eventually increasing the interest rates.
This would help push the trading price of the dollar in a positive direction. With the yuan price entering the north zone, more investors will start falling in its favor, thus, increasing the yuan price.
Performance of Taiwanese dollar and South Korean Won
The report shows that the trading price of the Taiwanese dollar has experienced a 0.3% surge. While the trading price of the South Korean won has dived by 0.5% in the latest market session.
The Japanese yen has recorded a 0.2% dip while the Thai baht has dipped by 0.5%.