ALBAWABA – As the United States (US) Dollar rose to a one-month peak on Monday, the Japanese Yen and Chinese Yuan both fell against a stronger US dollar, with the yen hitting its lowest point since November 10, news agencies reported.
Likewise, the yuan fell to its weakest level in 2023 after a spate of disappointing economic figures added to concerns about China’s sputtering growth.
The offshore yuan dropped as much as 0.3 percent on Monday to 7.2816 per dollar, slipping just below its 2023 low of 7.2857 set in June, according to Bloomberg.
Overall, the currency has tumbled about 5 percent this year, making it the worst-performing currency in Asia, after the yen and South Korea’s won.
The yen breached the 145 per US dollar level, to 145.22, the lowest since the end of 2022, before regaining some ground.
Japan’s yen stabilized at 144.92 against the US dollar, up 0.03 percent, according to Reuters.
The monetary authorities in Japan intervened in currency markets last September when the dollar rose past 145 yen. The Ministry of Finance actively bought the yen to push the pair back to around 140 yen. The yen is down nearly 10 percent against the dollar for the year.
Currently, investors hold a short position in the yen worth $7.25 billion, down 30 percent from a 14-month high last month, Reuters reported.
Reuters’ analysts said Gross Domestic Product (GDP) and Consumer Price Index (CPI) data in Japan are due this week and are likely to play an impactful role in the market. Additionally, US retail sales data is slated to come in this week, which could continue to push Treasury yields higher.
Meanwhile, in China, bank loans slid to a 14-year low, consumer and producer prices both declined, and exports slid the most since February 2020, as reported by Bloomberg.
China’s stumbling economy and the lack of effective stimulus have left the yuan with little support as the US dollar rallied.
According to Reuters, markets anticipate an 89 percent chance of the Federal Reserve halting on further interest rate hikes at its meeting next month, the CME FedWatch tool showed. Whereas traders anticipating no more hikes for the rest of 2023.
Euro, pound down on stronger US dollar
The dollar index, which measures the US currency against six peers, rose 0.097 percent to 102.95, having broken to a the highest level in more than a month, at 103.02.
The euro was down 0.12 percent to $1.0931, while the sterling eased 0.15 percent to $1.2675.
The Australian dollar fell 0.42 percent to $0.6470, while the kiwi slipped 0.36 percent to $0.5963, and both slid to their lowest levels since November last year earlier in the session.
Australia and New Zealand’s currencies have been undermined by disappointing trade and inflation data from China, the biggest buyer of their resource exports.
