Most Asian currencies made up for recent losses on Thursday, as pressure from the dollar and Treasury yields eased a bit. However, the Federal Reserve’s hawkish signals kept gains from being too big.
The South Korean won did the best out of all the currencies in the region. It went up by 0.8% after the South Korean government said it would step in to support the won on currency markets.
This year, economic problems in South Korea and rising interest rates in the U.S. hurt the won and drove it to a 13-year low.
Related: Asia’s markets were shaky because of the possibility of a recession.
The offshore Chinese yuan went up by 0.5%, which was a good sign after it hit a record low last month. The Chinese markets on land were closed for a week because of a holiday.
But local media said that holiday spending in the country stayed the same, which could mean that the economy is still doing well even though COVID lockdowns have hurt this year.
This year, the Chinese government has put out a lot of stimulus packages to help the economy grow. In the short term, monetary policy is likely to stay easy. It is also said to have stepped in to support the yuan on the currency markets.
Small gains were made by other Asian currencies. The Singapore dollar went up by 0.2% and the Thai baht went up by 0.5%.
This week, pressure on regional currencies eased as the dollar fell from a 20-year high on hopes that a weak economy will force the Fed to stop being so tough on the economy.
But Fed officials’ hawkish comments on Wednesday and signs of strength in the U.S. economy killed the idea of a dovish pivot. On Wednesday, the dollar went up by almost 1%, and on Thursday, it was trading well above its lows in October.
Futures on the dollar index went down by 0.2%, and yields on 10-year Treasury bonds were just below an 11-year high.
The focus is now on the U.S. nonfarm payrolls data, which will be released on Friday. This will give us more information about the world’s largest economy. When there are signs of strength in the job market, the Fed has more room to keep raising rates quickly, which is likely bad for currency markets.
Related: The Chinese Yuan leads Asia’s currency decline as the US dollar reaches a 20-year high.
The New Zealand dollar went up by 1% in the Asia-Pacific region after the Reserve Bank of New Zealand raised interest rates this week and said it would do more to tighten policy to fight high inflation.
The Australian dollar went up by 0.8%, even though data showed that the country’s trade surplus fell more than expected.
