World Trade

Asian currencies are trapped between low inflation and tightening Fed policy.

Most Asian currencies stayed the same on Friday as investors digested comments from Federal Reserve officials that more interest rate hikes were likely, even though there were signs that U.S. inflation was slowing.

The value of the Chinese yuan, which was 6.7361 per dollar before, didn’t change much, and neither did the value of the Indian rupee or the Singapore dollar.

A fresh lockdown in the industrial powerhouse of Yiwu and other parts of Hainan province shook people’s confidence in China. This year, the COVID virus has caused a string of lockdowns that have slowed China’s economic growth by a lot.

The health of the Chinese economy will be judged by how important Chinese data on industrial production and retail sales come out next week.

As investors in Asia looked at the news that consumer and producer price inflation in the US had slowed in July, they were cautious.

Overnight comments from Fed officials, though, hinted that rate hikes would continue until inflation returned to the bank’s 2% target. The Consumer Price Index rose to 8.5% in July.

Mary Daly, president of the San Francisco Federal Reserve, said on Thursday that she would be willing to support a rate hike of 75 basis points in September, despite the fact that she believes the central bank still has a long way to go before inflation is brought under control.

U.S. Treasury yields increased overnight despite the fact that more and more investors are betting on a modest 50 basis-point boost from the Fed at its September meeting.

As of 01:24 ET (05:24 GMT), both the spot index and the futures contract for the dollar index were up 0.1%. The dollar was predicted to fall by 1.4% this week.

Friday saw a 0.1% increase in the value of the Malaysian ringgit as the country’s economy grew by 8.9% in the second quarter, much exceeding predictions of 6.7% growth. Malaysia was able to avoid the effects of slowing global growth in the second quarter of this year thanks to its strong manufacturing sector. This makes Malaysia one of the Southeast Asian countries with the fastest growth.

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