Investing.com– Most Asian currencies were flat to lower on Thursday as the prospect of a slower rate cut in the US in 2025 kept traders averse to regional markets.
China’s yuan was among the worst performers for the day as PMI data showed support for stimulus measures introduced in recent months was now fading.
Regional trading volume remained limited, as major markets such as Japan remained closed for the New Year holiday.
The dollar remained upbeat, thanks to expectations of a slower pace of rate cuts by the Federal Reserve in 2025, while protectionist policies under incoming President Donald Trump are also expected to favor the greenback.
And they moved slightly in Asian trade, but were at their highest levels since November 2022.
Chinese yuan slips as manufacturing PMI disappoints
China’s yuan weakened on Thursday, with the pair rising 0.3% to 7.3190 yuan – its highest level in more than a year.
data showed the country’s manufacturing sector grew less than expected in December as support from recent stimulus measures dried up.
The reading came just days after the data also showed weaker-than-expected growth in the manufacturing sector.
The prints added to concerns about a slowing economic recovery in China, with recent stimulus measures providing only limited support. Increased trade headwinds under Trump are also expected to weigh on China’s economy, although Beijing is expected to provide more fiscal stimulus to offset this trend.
Asia FX Nursing Losses in 2024
Most Asian currencies were flat on Thursday after mostly posting losses through 2024. Most of those losses also came in recent months, as the prospect of a slower rate cut and more protectionist US policies led traders to largely favor the greenback.
The Japanese yen was among the worst affected by this trade, as the Bank of Japan’s mostly bleak outlook for 2025 increased pressure on the currency. The yen pair moved little on Thursday after jumping to a five-month high of nearly 158 yen in recent sessions.
South Korea’s won strengthened on Thursday, but was among the worst-performing Asian currencies in 2024. The won pair is up nearly 15% in 2024, with heightened political turmoil in the country adding to pressure on the won.
The Singapore dollar pair fell 0.2% on Thursday, thanks to a gross showing that the economy grew more than expected in 2024, at 4%.
But it slowed sharply in the fourth quarter, raising doubts about the island nation’s economic outlook in the coming quarters.
The Australian dollar rose 0.5% after slipping to its lowest level in more than a year, while the Indian rupee fell 0.3% after hitting a record high of 86 rupees this week.
