Asia FX Set For Annual Losses On Strong Dollar; Chinese factory data in focus By Investing.com
Investing.com– Most Asian currencies fell on Tuesday and headed for annual losses as the dollar remained strong heading into 2025, while China’s yuan weakened after data showed the country’s factory activity was expanding more slowly.
In Asian trade, it was weaker by 0.1%, but remained close to the two-year high reached earlier in the month. It is also marked below.
Asian currencies have weakened sharply this year as the Federal Reserve’s interest rate outlook and fears of a potential US-China trade war under Donald Trump’s administration dampened risk sentiment.
The Fed’s recent signal of tapering cuts in 2025 once again strengthened the dollar and put downward pressure on Asian currencies.
China’s yuan falls as factory activity expands at a slower-than-expected pace
The Chinese yuan’s onshore pair rose 0.2% on Tuesday, while the offshore pair remained largely unchanged.
China rose for a third straight month in December as a raft of new stimulus measures continued to provide support, purchasing managers’ index data showed on Tuesday. However, growth was somewhat lower than market expectations and below the previous month’s reading.
Markets await more clarity on Beijing’s plans for stimulus measures next year. Recent reports suggest that the country will increase fiscal spending to support economic growth.
Asian currencies are poised for annual decline
The Japanese yen fell 0.3% on Tuesday after hitting a five-month high in the previous session. The yen should lose more than 10% against the US dollar for the year.
The Singapore dollar pair was largely unchanged but headed for annual gains.
The Australian dollar was slightly lower on Tuesday.
The Indian rupee pair rose 0.1% and was on track to gain more than 3% this year. The rupee is hitting new record lows against the US dollar this month.
The Thai baht rose 0.3%, while the Indonesian rupiah pair gained 0.2% on Tuesday.
South Korea’s won falls amid deepening political unrest
The South Korean won rose 0.1% on Tuesday. The won weakened nearly 6% against the US dollar in December, leading to the country’s failed state of emergency.
The won is the worst-performing currency among its Asian peers, down more than 12% in 2024.
In the latest updates, a South Korean court on Tuesday approved an arrest warrant for President Yoon Suk Yeol, who was impeached and suspended from office following his Dec. 3 decision to impose martial law.
The Corruption Investigation Office for Senior Officials (CIO) said the Seoul Western District Court granted the warrant sought by investigators probing Yoon’s brief imposition of martial law.