Investing.com– Most Asian currencies weakened on Monday as the dollar climbed to near two-year highs, while the Chinese yuan fell to a 17-year low, slipping further after for him to break a major psychological level in the previous session.
Comments from US Federal Reserve officials over the weekend also weighed on regional currencies. They said that the central bank's efforts to control inflation are not yet complete but they stressed the importance of avoiding damage to the labor market while pursuing that goal.
That was 0.1% lower in Asian trade, but remained near a two-year high. The greenback has consistently approached this level since it arrived last month. They also saw a slight decline.
Chinese yuan hits lowest since 2008 even as PBoC provides support
The onshore Chinese yuan pair climbed 0.5% to 7.3648 yuan on Monday, its highest level since early 2008.
This follows the yuan's slide past 7.3 per dollar on Friday, driven by economic challenges and a widening output gap with the US
To counter fears of a further devaluation, the People's Bank of China (PBOC) reaffirmed its commitment to support the yuan on Monday, setting its daily reference rate stronger than the critical level of 7.2 per dollar.
The PBOC set the yuan's midpoint rate at 7.1876 per dollar, allowing the currency to trade within a 2% band around this level. This indicated a slight strengthening of 2 pips compared to the previous position.
December data released on Monday failed to provide any support for the yuan, despite recording the fastest growth in seven months.
Markets are holding out for more clarity on Beijing's plans for stimulus measures in 2025. Recent reports suggested the country would increase fiscal spending to support economic growth, but are still looking for numbers official.
This week's focus will be very important for December, which is likely to accommodate expectations for more stimulus in the country.
Strong dollar pressure Asia FX; US jobs data, Fed minutes wait
The dollar has continued to put downward pressure on Asian currencies, as global uncertainty due to the incoming president, Donald Trump, and the expectation that rates will remain higher further to support the green background.
Markets are now waiting for the meeting of the Federal Reserve December 17-18 which is coming up on Wednesday, and December is expected on Friday.
The Japanese yen pair fell 0.3% despite data showing that the country's services sector grew for the second consecutive month in December, driven by strong demand and continued business expansion.
The Australian dollar edged 0.2% higher, while the Singapore dollar pair was largely unchanged.
The Thai baht pair slipped 0.6%, while the Indian rupee pair slipped 0.1% higher.
South Korea's pair of winners rose 0.3% on Friday amid ongoing political turmoil in the country.
Protesters took to the streets in the South Korean capital Seoul to demand the arrest of President Yoon Suk Yeol, after he attempted to impose martial law in the a country
