The past few days have seen currencies like the rupee, yen, and yuan making big headlines. The reasons are not the best. The value of currencies of several Asian nations tanked against the United States dollar. Some have hit multi-year lows. But why?
A variety of factors are responsible. Here's a look at the current situation regarding currency exchange rates, and causes that have led to Asian currencies weakening against the US dollar.
Asian currencies faring poorly
For five days straight, the value of the US dollar has been inching up. The Indian rupee, on Tuesday, ended at a record closing low of 83.535 against the dollar. The Japanese yen, too, felt the heat from the rising greenback. On Tuesday, it hovered around 154.28 per US dollar, the lowest in 34 years.
The Malaysian ringgit, on Monday, slipped to 4.78 per US dollar, only a breath away from its 26-year-low of 4.8053. That was still better than its peers, the Indonesian rupiah and South Korean won.
In the past couple of days, the Indonesian rupiah has dived below the 16,000 per US dollar mark, a first since 2020. Meanwhile, South Korea’s won slipped to the closely-watched psychological level of 1,400 per US dollar. That last happened during the pandemic in late 2022, Bloomberg reported.
There has been a drop in the Chinese yuan too. However, this was not as steep as other currencies in the region. On Tuesday, the yuan hovered around a five-month low at 7.24 per US dollar.
Factors affecting the value drop
Most Asian currencies have become weaker due to a stark rise in the value of the US dollar. The jump in the price of the greenback is courtesy of various reasons, ranging from the Iran-Israel tensions to inflation data. There are also country-specific factors affecting the fluctuations in currency.
Here's a look at some of the US-related factors:
READ MORE: Hotter-than-expected US inflation data may impact Indian stock market, but...
Some regional factors affected Asian currencies, too.
Chinese economic data: A flurry of China’s economic data points was released recently. While the GDP numbers painted a positive picture, other indicators like property investment, retail sales, and industrial output showed that demand remains shaky and that the nation’s economic rebound remains uneven. That would have impacted investor sentiment, which has already been subdued due to the larger economic crisis, Reuters reported.Chinese businesses are holding onto dollars because they anticipate a decline in the value of their own currency. This phenomenon is contributing to the fall of the yuan, which is already affected by unstable stock markets and sluggish economic growth in China, the world's second-largest economy.
With inputs from agencies
2024-04-16T14:10:37Z dg43tfdfdgfd