Key Takeaways:
Most Asian currencies lower, South Korean won falls due to political unrest
Japanese yen rises on rate hike bets after inflation reading in Tokyo
US Dollar Index remains strong, near 2-year high- US Dollar Index Futures see an increase
Weekly fall projected for Asian currencies after Federal Reserve’s rate cut outlook- USD/JPY pair falls 0.3%
Consumer price index inflation grows in Japan, chances of near-term rate hike by BoJ- Japan’s factory output falls in November
- Indian rupee weakens against U.S. dollar, USD/INR pair rises
Chinese yuan’s USD/CNY pair remains unchanged
Chinese industrial profits fall at a reduced pace in November
Government plans ‘decisive’ market stabilization measures- Korean won’s USD/KRW pair rises due to political crisis and impeachment vote on acting president and Prime Minister Han Duck-soo
- Won falls below 1,470 per dollar due to political uncertainty
- Won continues freefall to 1,464.8 amidst political strife
- Won hits a two-month low on rate cut uncertainty and geopolitical risks
BOK selects 6 local and 5 foreign market maker banks for Korea-China currency trade.
Emergency meeting with top financial officials held in response to market uncertainty
Government vows to respond with market stabilization measures to combat one-sided market trends- Unlimited liquidity deployment promised to address financial market uncertainty
Possibility of Han’s impeachment leading to economic changes and Choi Sang-mok next in line
Political Unrest Impacts Asian Currencies
South Korean won experiences a significant fall due to political unrest, with the USD/KRW pair rising as a result. Additionally, the uncertainty surrounding the impeachment vote on acting president and Prime Minister Han Duck-soo has led to market instability.
Economic Indicators in Japan
The Japanese yen has seen a rise in value as rate hike bets increase following an inflation reading in Tokyo. Furthermore, Japan’s consumer price index inflation grows, potentially leading to a near-term rate hike by the Bank of Japan (BoJ). However, Japan’s factory output has decreased in November, indicating challenges in the country’s industrial sector.
Currency Market Trends
The US Dollar Index remains strong near a 2-year high, while the USD/JPY pair falls slightly. The Indian rupee weakens against the U.S. dollar, and the Chinese yuan’s exchange rate remains unchanged. Moreover, industrial profits in China have fallen at a reduced pace in November.
Market Stabilization Measures
Various governments, including South Korea’s, have announced market stabilization measures to address the one-sided market trends and combat uncertainty. These measures include unlimited liquidity deployment and the selection of market maker banks for currency trade, emphasizing the importance of stability in volatile economic conditions.