Asia-Pacific currencies weakened on fears of Fed tightening

Asia-Pacific currencies such as the Korean won and the Japanese yen weakened against the U.S. dollar in early Asian trade on Monday on fears of a tightening monetary policy by the Federal Reserve.

The chairman of the Fed, Jerome Powell, made a blind vote at the Jackson Hole Symposium last Friday and indicated that the interest rate will increase for a long time. MUFG Bank Ltd. Analysts quoted Powell’s comments in the research report as saying: “We’ll wait until then.” I’m sure the job is done. “

Powell’s comments suggest that even if the Fed stops raising interest rates after this December, analysts say the pause could last for six months or longer and the timing of rate cuts could be pushed further. Analysts added that this prospect, in addition to the move to reduce the Fed’s balance sheet starting next month, will keep monetary conditions tight in financial markets.

Asian ex-Japanese currencies are likely to come under pressure on Monday, given the strength of the US dollar following Powell’s comments, analysts at MUFG Bank added.

Dollar USDKRW,
+ 0.64%
It gained 1.0% to 1,349.60, its highest intraday high since April 2009, according to FactSet. The greenback was 0.9% higher at KRW1,348.11. Also, the dollar USDJPY;
+ 0.82%
It added 0.6% to Y138.53 and gained 0.3% against the Singapore dollar USDSGD.
+ 0.38%
to S$1.3988 Australian Dollar USDAUD;
It slipped 0.3% to US$0.6863.

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