Most Asian Currencies Weakened Amid Dollar Strength
Most Asian currencies weakened on Monday, suffering from sustained pressure from the strong dollar. The dollar was boosted by stronger-than-expected U.S. payrolls data for December, which showed the labor market remained strong. This heightened concerns that the Federal Reserve may cut interest rates at a slower pace in 2025, with Goldman Sachs analysts now expecting only two rate cuts this year.
The yuan weakened despite positive Chinese trade data, which showed a growth of over 5% in exports in December. However, this growth was largely due to exporters front-loading shipments ahead of expected U.S. tariffs. Recent measures from the People’s Bank of China failed to support the yuan, leading to focus on more stimulus measures from Beijing to respond to President-elect Donald Trump’s tariffs.
Broader Asian currencies moved in a flat-to-low range, pressured by the prospect of higher interest rates for longer in the U.S. The Japanese yen remained fragile due to uncertainty over a Bank of Japan meeting later this month, while the Australian dollar rose 0.1% after hitting a near-five-year low last week.