Most Asian currencies rebounded on Friday as the dollar weakened following President Donald Trump’s call for interest rate cuts, while the Japanese yen regained ground after the Bank of Japan delivered an anticipated rate hike.
The Bank of Japan raised interest rates by 25 basis points, indicating that inflation will stay supported and close to its annual target in the years ahead. The BoJ also projected additional rate hikes if its economic outlook aligns with expectations in the coming months.
The Japanese yen initially fell 0.4% before the rate decision, but then recovered and rose 0.1%. The dollar, on the other hand, set for its worst week in two months after Trump’s call for the Federal Reserve to implement immediate interest rate cuts.
Trump addressed the World Economic Forum in Davos, Switzerland, and urged OPEC and other oil-producing nations to lower prices, which could lead to a swift resolution of the Russia-Ukraine conflict by cutting off financial support to Russia’s military efforts.
With the falling dollar and prospects of gradual imposition of US tariffs, regional currencies took a sigh of relief on Friday with sharp gains. The Chinese yuan, Australian dollar, and Singapore dollar all rose, while the Malaysian ringgit and Indian rupee fell slightly.