Thursday, Asian currencies went down because the Fed said it would keep raising interest rates even though inflation was going down. This made the dollar stronger and hurt Singapore’s growth outlook.
The Chinese yuan fell 0.3% and the Japanese yen 0.2%. After Wednesday’s advances, most Asian currencies were trading lower.
The U.S. dollar index gained 0.2% after falling 1.1% on Wednesday. USD index futures rose 0.2% after losses.
Reuters reported that Minneapolis Fed President Neel Kashkari said the central bank will keep tightening policy until its inflation target is fulfilled.
The target rate could reach 4.4% by year’s end. Kashkari is the most hawkish Fed member, but others also expect rates to rise, albeit slowly.
Stock markets soared after the data, with traders now pricing in a 50 basis point raise by the Fed at its next meeting.
Singapore’s annual economic growth prediction was lowered from 3% to 5% to 3% to 4%, causing the Singapore dollar to fall 0.1%. The country also lowered its second-quarter GDP, citing global economic weakness.
China, Singapore’s main trading partner, is a major headwind. This year’s COVID-19 lockdowns hurt the mainland economy.
After Wednesday’s rate hike, the Thai baht was flat.
Thailand rates
10-Aug-2022
Actual: \s0.75%
Forecast: \s0.75%
Previous: 0.50%, which began a tightening cycle.
The baht has rebounded from this year’s lows on improving economic forecasts. The central bank signaled a moderate pace of rate hikes to tackle inflation.
Indonesia’s rupiah increased 0.5% as oil prices fell.