The Chinese yuan dropped on Friday after mixed signs from business activity figures, while Asian currencies were destined for massive monthly losses, as a more uncompromising Federal Reserve and a robust dollar led to a surge in dollar outflows.
The yuan in the onshore region dropped 0.1 percent and the offshore yuan dropped 0.5 percent following the release of an official Chinese PMI figures showed that the manufacturing sector in China unexpectedly increased in September. A private survey revealed that the slowdown in the manufacturing industry increased in the month due to the ongoing headwinds caused by COVID lockdowns.
The non-manufacturing PMI also increased at a slower pace during September than in the previous month, which suggests that the second-largest economy in the world was not immune to pressure.
The yuan offshore hit an all-time low this week as a wider gap between local and international rates led traders to abandon the currency. It was also predicted to experience an increase of 3% in September, the seventh consecutive month of declining this year.
The yuan onshore was forecast to experience to suffer a 3.5 percent decline in September. However, it’s likely to rise in the near-term because China’s People’s Bank of China undertakes measures to help the ailing currency.
Broader Asian currencies were flat on Friday, as the dollar continued to slide away from a peak of 20 years. The dollar index dropped 0.1 percent to 112.17 as of the time, while futures on the dollar index fell in the same interval.
However, the dollar was expected to increase by about 3 percent in September, the fourth consecutive month of gains while it continued to profit from the rise in rates and safe demand for safe havens.
A more hawkish Fed and the rising Treasury yields and a worsening outlook for the economy make the majority of Asian currencies on the verge of sharp drops in September.
The South Korean won hovered around 13-year lows. It was also the most volatile Asian currencies in September with a more than 6percent loss. A weakening economy in the China, the country’s largest trading partner China as well as the rising cost of commodities and inflation have dimmed the outlook for south Korea. South Korean economy.
On Friday, data showed that the production of South Korea’s huge industrial sector shrank by more than was expected in August, which bodes poorly for Asia’s fourth-largest economy.
The Japanese yen dropped 0.2 percent, receiving only a little help from higher-than-expected manufacturing and retail sales figures. The currency also fell almost 4% in September.
The Indian rupee decreased 0.3 percent to a near-record low prior to a widely anticipated rate hike from the Reserve Bank of India. The Reserve Bank of India is expected to raise the rates 50 basis points, as it works to limit inflation and help support the rupee.
