Asian Currencies Rises As Fed Meeting Approaches

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Asian Currencies Rises As Fed Meeting Approaches

Asian Currencies Rises As Fed Meeting Approaches

As the most anticipated Fed meeting approaches near, the US Dollar has gone on the back foot. This has allowed most of the Asian currencies to gain the upper hand as Dollar is plagued by weakness. At the same time, China is also promising more stimulus which is improving the sentiment of the Asian FX.

A little while ago, the US business activity data was released, which was weak. This means that the Federal Reserve will now have very little room and very little reason to keep raising the interest rates. So that's one of the major reasons why the US Dollar is retreating against other currencies such as JPY, CNY, and so on.

US Dollar Index Down By 0.1%

It appears that the US Dollar's rebound from its yearly lows is finally running out of steam. Just on Tuesday's session, the dollar index futures as well as the dollar index lost 0.1% in a single day.

Similarly, the Chinese Yuan gained 0.4% against the greenback and made a stellar recovery from its lows of 7.2. According to experts, the PBoC decision to introduce a daily midpoint fix helped the CNY to gain the upper hand.

In addition, there are also reports that the Chinese state banks are selling dollars in the market. This move is also supporting the Yuan as the dollar supply has improved.

The Chinese authorities have also promised more efforts to support the currency. Just in 2023 alone, the CNY lost 4% against the US Dollar amid problems in the economic recovery.

On the surface, the stimulus measure will help the Chinese economy but it will also open the room for increased liquidity. In turn, this would put pressure on the CNY and may force the PBOC to introduce rate cuts.

If we look around, the JPY gained 0.1%, as the BoJ meeting is scheduled for later this week. On the other hand, the Indonesian Rupiah remained flat amid the upcoming Bank of Indonesia meeting.

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