Asian currencies are under pressure across the board: the yen lost 154, the won broke 1400, and the Indian rupee hit a new low
Finance Associated Press, April 16 (edited by Xiaoxiang) On Tuesday (April 16) during the Asian session, as the Federal Reserve's interest rate cut expectations continued to be hit and geopolitical tensions in the Middle East were difficult to dissipate, Asian currencies encountered a comprehensive storm under the "heavy pressure" of the strong dollar......
Whether it is the renminbi, the yen, the Indian rupee, the South Korean won and other top four Asian economic currencies with global influence, or the small currencies of ASEAN countries such as the Indonesian rupiah, Vietnamese dong and Philippine peso, they all encountered a new round of selling pressure during the Asian session. Among them, many currencies have fallen directly below the key round number mark today, while others have hit new lows in months or even in history!
Mitul Kotecha, head of Asia FX and emerging markets macro strategy at Barclays, said, "Most Asian currencies are having to succumb to the strength of the US dollar. Asian currencies were weakened by the broader strengthening of the US dollar in the currency market, driven by higher US Treasury yields and rising risk aversion in the market. ”
The ICE U.S. Dollar Index has now refreshed its highest level since November last year, hitting an intraday high of 106.44 on the back of strong U.S. "horror data" retail sales data overnight, marking the fifth consecutive session of higher trading in the U.S. dollar index. In stark contrast, the Bloomberg Global Emerging Market Currency Index fell all the way to a new low for the year.
Christopher Wong, currency strategist at OCBC Bank in Singapore, said, "Unwelcome factors such as geopolitics, prolonged higher US interest rates and recent volatility in the RMB and JPY are likely to continue to weaken risk appetite sentiment in Asian currencies." ”
In terms of the yuan, data from the China Foreign Exchange Trade System showed that the central parity of the renminbi against the US dollar was 7.1028 on Tuesday, down 49 points, and the central parity of the previous session was 7.0979. Although the adjustment of the mid-parity of the day was not large, the offshore yuan continued to decline during the Asian session, hitting a new low since November last year, and the USD/CNH once touched as high as 7.2831.
The following is a summary of the intraday performance of Asian currencies other than the renminbi against the US dollar:
JPY: Lost below the 154 mark
USDJPY touched as high as 154.60 during Tuesday's Asian session, the highest since 1990. The ferocious decline of the yen has prompted traders to lament that even if the sword of Japanese intervention still hangs high, the troubled yen seems to have become a "bottomless pit".
Daisaku Ueno, chief foreign exchange strategist at Mitsubishi UFJ Morgan Stanley Securities, said that without intervention, the yen could fall to 160.20 against the dollar – the level of April 1990. However, he believes that the Japanese authorities may intervene as soon as the yen exceeds 155 against the dollar.
Wu, a trader at Singapore's StoneX Financial, said that we expect the yen exchange rate to weaken further and the next level could be 160, unless there is some change in fundamentals. And if the Bank of Japan does not make strong moves, I even doubt that the pair will be able to fall to 170.
South Korean won: touched the 1400 mark
The dollar briefly rose above the 1,400 mark against the South Korean won in the morning, touching the round number mark for the first time since November last year. In terms of technical indicators, the 14-day RSI indicator for the South Korean won is already in the most oversold state since 2011.
The continued depreciation of the won prompted the South Korean authorities to issue a warning about exchange rate fluctuations within a few days. The South Korean authorities said that unilateral excessive fluctuations in foreign exchange are not desirable and will closely monitor foreign exchange fluctuations, supply and demand. Excessive unilateral FX fluctuations are not desired.
Cho Yun-je, a member of the Bank of Korea's policy committee, said the won had weakened more recently than other currencies, but that wasn't enough to cause concern.
Indian Rupee: Record low
The Indian rupee further rewrote its all-time low on Tuesday. The USD/Rupee currency briefly touched 83.535 during the day, breaking through the intraday high of 83.50 reached in November last year.
The weakening of the rupee has prompted traders to speculate that the RBI may use its foreign exchange reserves and intervene in the market to curb exchange rate volatility. Despite this, however, the rupee remained one of the best performing emerging market currencies on Tuesday, falling much less than the rupiah and the won.
Shinhan Bank Deputy Governor Kunal Sodhani said the RBI is likely to use this ammunition to curb any form of excessive volatility, given that India's foreign exchange reserves are at an all-time high. A weaker renminbi, a stronger dollar index and outflows from domestic equities have all weighed on the Indian rupee.
IDR: A four-year low
The rupiah was one of the sharpest Asian currencies on Tuesday, tumbling more than 2% against the dollar to its lowest level in four years, prompting Bank Indonesia to intervene further in the domestic foreign exchange market. Bank Indonesia said it would always maintain stability in the market.
The rupiah has lost nearly 5% of its value this year, making it one of the worst-performing currencies in the Asia-Pacific region after political turmoil during Indonesia's presidential election raised questions about the country's fiscal prospects. Nicholas Chia, Asia macro strategist at Standard Chartered Bank, said, "While Bank Indonesia has stepped into the market, the purpose of this move is to suppress the lower USD/Rupiah exchange rate and calm volatility, not to curb the weakness of the exchange rate." ”
Philippine peso: fell to a seven-month low
The Philippine peso fell to a seven-month low against the dollar on Tuesday.
Philippine central bank governor Eli Remolona said in an interview on Monday that the peso is likely to depreciate whenever there is a dispute in the South China Sea. This appears to be the first time that Philippine officials have confirmed that the impact of the escalating South China Sea dispute is already being felt in the local foreign exchange market. However, he added that most of the peso's (depreciation) pressure was caused by a strong dollar.
VND: Fell to a record low
USD/VND hit a record high of 25,295 during the day.
Previously, Vietnam had just experienced a round of stock and exchange double kills on Monday. Industry insiders said that stabilizing the market has become a pressing issue in Vietnam, and smugglers are taking advantage of the local rise to profit, causing the Vietnamese dong exchange rate to distort and weaken, thereby hurting the Vietnamese economy. In recent months, senior officials such as Prime Minister Pham Minh Chinh and members of the National Advisory Committee on Financial and Monetary Policy have been urging a solution.
(Finance Associated Press Xiaoxiang)