Log in
Log in
Or log in with
GoogleGoogle
Twitter Twitter
Facebook Facebook
Apple Apple     
Sign up
Or log in with
GoogleGoogle
Twitter Twitter
Facebook Facebook
Apple Apple     
News
All NewsCompaniesIndexesCurrency / ForexCommoditiesCryptocurrenciesETFInterest RatesEconomyThemesSectors 

Marketmind: Asia's FX doom loops

09/25/2022 | 04:04pm EST
Illustration picture of Japanese yen and U.S. dollar banknotes

Expect an ugly open to Asian markets on Monday as investors try to shield themselves from the fallout from the widespread selling that battered stocks, bonds, and currencies on Friday.

The historic rout in UK bonds and sterling took center stage on Friday but at the heart of the gloom shrouding world markets is the Fed's drive to raise rates far higher than most people had bargained for, and the effect that is having on global rates.

And the dollar.

The dollar's 'wrecking ball' status is being painfully felt in Asia, where several currencies have sunk to multi-year or record lows, and central banks have intervened to try and stop the rot.

On Friday, India's rupee hit a record low, Indonesia's rupiah and China's yuan fell to their weakest levels since mid-2020, the Thai baht slumped to a 16-year low, and South Korea's won hit a 13-year trough.

Falling currencies increase inflationary pressures, forcing policymakers to turn more hawkish, tightening financial conditions, and crushing demand. Central banks will find it hard to break this doom loop.

Their pool of FX reserves for intervention purposes is also limited - even the Bank of Japan will be aware its $1.3 trillion stash won't last forever if it follows last week's historic dollar-selling intervention often enough.

And talking of doom loops, if Asian central banks sell chunks of their U.S. Treasuries holdings to support their domestic currencies, U.S. yields rise, Treasuries are more attractive, investors pile in, and the dollar strengthens.

Asia's economic and corporate calendars on Monday are light.

A batch of Japanese economic data, including retail sales and consumer confidence, and China's September PMIs will give an insight into the health of the region's two largest economies at the end of the week.

India's central bank announces its latest interest rate decision on Friday too.

Key developments that could provide more direction to markets on Monday:

German Ifo (September)

(Reporting by Jamie NcGeever in Orlando, Fla.; Editing by Alistair Bell)

(Reuters) - A look at the day ahead in Asian markets from Jamie McGeever


ę Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
BRITISH POUND / US DOLLAR (GBP/USD) -1.01% 1.21806 Delayed Quote.-9.16%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -0.89% 0.73732 Delayed Quote.-6.18%
EURO / US DOLLAR (EUR/USD) -0.35% 1.05108 Delayed Quote.-7.30%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.44% 0.01223 Delayed Quote.-8.43%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -1.49% 0.63133 Delayed Quote.-6.26%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) -0.66% 6.95623 Delayed Quote.10.16%
Latest news "Economy"
12:02pBrent crude futures fall $1 to session low of $84.49/bbl…
RE
12:01pBribery, fraud charges are dismissed against ex-New York lieutenant governor
RE
11:57aNike Cuts Ties With Kyrie Irving 1 Month After Suspending Relationship With Nets Star - The Athletic
RE
11:56aJury begins deliberating in Trump Organization's criminal tax fraud trial
RE
11:56aEU says making sustainability rules easier to apply is a top priority
RE
11:55aFrench prosecutors name Ukrainian suspect in Lebanese central bank probe
RE
11:54aFTSE 100 Closes Up Slightly Amid Muted Reaction to China, US News
DJ
11:53aSlack CEO Butterfield to depart next month - Business Insider
RE
11:52aFX swap debt a $80 trillion 'blind spot' global regulator says
RE
11:52aFrench prosecutors name Ukrainian suspect in Lebanese central bank probe
RE
Latest news "Economy"