Asia FX dips, dollar steadies at 10-mth high on rate hike talk
Investing.com-- Most Asian currencies fell slightly on Tuesday, while the dollar steadied at its highest levels for the year on growing bets that U.S. interest rates will rise further this year.
The dollar index and dollar index futures rose slightly in Asian trade, as hawkish comments from Minneapolis Federal Reserve chief Neel Kashkari further bolstered expectations for higher rates.
Kashkari said he saw at least one more rate hike this year, and that rates will need to stay higher for longer to cool some aspects of the U.S. economy. Such a scenario bodes poorly for Asian currencies, as the gap between risky and low-risk interest rates narrows.
Sentiment towards Asia was also held back by persistent concerns over China, particularly a meltdown in its massive property sector. The yuan languished near 10-month lows despite a stronger-than-expected daily midpoint fix by the People’s Bank of China.
Focus this week is also on Chinese purchasing managers’ index data, which is expected to show continued weakness in business activity.
Concerns over China saw the Australian dollar fall slightly, with a monthly reading on Australian consumer inflation due later this week.
Broader Asian currencies kept to a tight range amid weak risk appetite, with most regional units trading at multi-month lows to the dollar.
The Indian rupee was flat, but was close to record lows, also coming under pressure from a recent spike in oil prices.
The South Korean won slipped 0.4% to an over one-month low, and was also close to testing 2023 lows. In Southeast Asia, the Singapore dollar shed 0.1%, while the Indonesian rupiah shed 0.2%, with both currencies also facing pressure from higher oil prices.
The Japanese yen traded sideways on Tuesday,
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