Investing.com– Most Asian currencies fell on Thursday as the dollar stabilized amid growing uncertainty over the path of U.S. interest rates, while the South Korean currency fell sharply after the country’s central bank unexpectedly cut interest rates.
Investors refrained from making larger bets ahead of the U.S. Thanksgiving holiday, which is likely to remain subdued for the rest of the week.
The dollar stabilized after keen overnight losses, although it remained within reach of recent two-year highs. Overnight data showed that the Federal Reserve’s preferred measure of core inflation rose in line with estimates. Another reading showed that the US economy was growing at a solid pace in the third quarter.
The inability to meet the Federal Reserve’s 2% inflation target, coupled with the possibility of higher import tariffs, could limit the central bank’s ability to lower interest rates next year.
It was last up 0.1% while also up 0.1%.
Currencies in regional markets remain peaceful for most of the week after US President-elect Donald Trump’s threat on Monday to impose additional trade tariffs on China, which could trigger a renewed trade war between the world’s largest economies.
Singapore dollar the pair rose 0.3%, while the Thai baht pair remained largely unchanged.
The Australian dollar pair rose 0.5% a day after a mixed session, showing that headline inflation remains steady while core inflation rose in October.
The Japanese yen pair also rose 0.4%, while the Indian rupee pair was largely subdued, remaining near recent record highs.
South Korea’s won is falling after BoK’s surprise interest rate cut
The Bank of Korea held a second straight meeting on Thursday in a surprise move, warning that economic growth was likely to ponderous further in the coming year.
South Korea’s victory weakened sharply, and after the BoK decision, the pair gained 0.5%.
The BoK lowered its GDP forecast for 2025 and also said that inflation is likely to decline in the coming year.
The Chinese yuan remains under pressure
The Chinese yuan remained under pressure, with the onshore yuan pair rising slightly higher to 7.25 per US dollar and remaining near a four-month high.
According to CNBC calculations, major investment banks and research firms predict weakening by an average of $7.51 on the dollar by the end of 2025. This would mark the currency’s weakest level on record since 2004.
The yuan remains tender following Donald Trump’s re-election and his renewed tariff threats and plans to impose additional tariffs on Chinese imports, including rates of up to 60%.
The weakening yuan has broader implications for emerging Asian currencies. Trade-sensitive currencies such as the South Korean won, Thai baht and Malaysian ringgit are under pressure due to their close economic ties with China and the fallout from US-China trade tensions.
