Asian Currencies Rise as Dollar Hits 7-Month Low Ahead of Powell’s Speech
Most Asian currencies saw gains on Tuesday as the dollar steadied at a more-than seven-month low amid expectations of a Federal Reserve interest rate cut in September. The weakening dollar has led to a rally in the Japanese yen and a slight dip in the Chinese yuan after the People’s Bank of China kept its benchmark loan prime rate unchanged.
The dollar’s decline is linked to growing optimism about a potential rate cut by the Fed, with Fed Chair Jerome Powell set to address the issue at the Jackson Hole Symposium on Friday. Analysts are predicting a 25 basis point cut in September, which could lead to more outflows for the dollar and strength in Asian markets.
The Japanese yen, boosted by a softer dollar, saw a slight drop on Tuesday following a strong rebound in the previous session. Meanwhile, the Chinese yuan weakened as the PBOC held its loan prime rate steady, with expectations of further cuts to come due to concerns about China’s economic slowdown.
Overall, Asian currencies traded flat to slightly lower, with the Australian dollar falling despite the Reserve Bank’s considerations of a rate hike. The Singapore dollar and South Korean won both saw modest gains, while the Indian rupee remained stable below record highs amid market intervention by the Reserve Bank of India.