Investing.com – Most Asian currencies held in a narrow range on Wednesday, stabilizing from recent losses as the dollar retreated from recent three-month peaks, although the prospect of extended U.S. rate hikes still kept traders on edge.
Regional currencies have suffered huge losses over the past three sessions after a string of strong U.S. economic indicators and hawkish comments from Federal Reserve officials led traders to largely re-price bets on an early central bank rate cut.
The trend has fueled a sharp rise in the dollar, with the dollar hovering just below its highest level since early November. And both fell about 0.1% in Asian trade.
With markets now pricing in rate cuts in March and May, Asian units are likely to feel more pressure in the coming weeks while the dollar remains strong. Higher US rates reduce the attractiveness of risky, high-yield assets.
The US January report, due out next week, should provide more signals on interest rate trends.
It was something of an outlier among Asian currencies, rising 0.1% and extending its strong gains from the previous session after warning it could still raise rates amid persistent inflation.
The index has stabilized after hitting a one-and-a-half-month low earlier this week amid continued uncertainty over the Bank of Japan’s plans to begin tightening policy.
It was little changed and also lagged significantly behind its regional rivals as concerns remained over China’s economic health. While Chinese authorities announced a slew of measures this week to support local stock markets, they have done little to address the country’s sluggish economic recovery.
China’s January report is due out on Thursday and is expected to provide some support for the yuan. The data also comes ahead of the week-long Lunar New Year holiday.
Most of the other Asian units kept a narrow distance. And both rose 0.1% after some losses this week.
Indian rupee companies outperform RBI, Reuters poll sees some strength
The pair rose 0.1% and managed to break below the 83 level against the dollar. This Thursday, the focus was on the fact that the central bank is expected to keep interest rates unchanged.
But the RBI’s views on inflation and economic growth will be in focus.
A Reuters poll showed analysts expect the rupee to strengthen this year amid continued support from the RBI.
But the Indian currency remains near record lows, showing little strength despite the Indian economy’s stellar growth over the past two years.