Investing.com-- Most Asian currencies moved little on Wednesday, while the dollar steadied near six-month highs as markets hunkered down before an interest rate decision from the Federal Reserve due later in the day.
Most regional currencies were nursing steep losses in recent sessions, as markets feared a potentially hawkish outlook from the Fed. The dollar was also trading just below six-month highs, having market strong gains in recent weeks.
The Indian rupee was one of the worst-performing regional currencies this week, sinking to a new record low of over 83 against the dollar, before recovering some lost ground.
The rupee was hit hard by a recent spike in oil prices, given India’s large reliance on crude imports. But weakness in the rupee is expected to attract more currency market intervention by the Reserve Bank of India.
Some weak economic indicators also weighed. The Japanese yen was flat to the dollar as data showed the country’s trade deficit grew substantially more than expected in August, due to weak demand in major export destination China.
But top Japanese currency officials warned against further weakness in the yen, and that they were in close contact with U.S. officials over any more intervention to support the yen.
Their warning also came just a few days before a Bank of Japan meeting, where the central bank is likely to offer more cues on a potential pivot away from negative interest rates.
Chinese yuan flat as PBOC leaves rates unchanged
The PBOC also set a stronger-than-expected daily midpoint for the yuan on Wednesday, as it struggles to maintain a balance between fostering an economic recovery and preventing further weakness in the yuan.
Dollar steadies with Fed in sight
Markets were focused squarely on the conclusion of a two-day Fed meeting later in the day, where the central bank is widely expected to keep interest rates on hold .
But a recent uptick in U.S. inflation is expected to elicit a hawkish outlook from the Fed, opening up the possibility of at least one more rate hike this year. Fed Chair Jerome Powell’s address after the conclusion of the meeting will be closely watched for any hawkish signals.
The central bank is also expected tountil at least mid-2024, presenting a subdued outlook for Asian markets.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.