Investing.com – Most Asian currencies fell on Monday, with South Korea’s currency taking the main losses amid the country’s escalating political crisis, while the U.S. dollar held steady ahead of a key inflation report later this year week.

Investor appetite for riskier assets has also been dampened by geopolitical tensions in the Middle East, after rebel forces in Syria toppled President Bashar al-Assad and took control of Damascus.

Media reports say al-Assad and his family landed in Moscow and were granted asylum while Israeli forces entered Syria.

The Korean won remains near its lowest level in two years

The South Korean won pair rose almost 1% on Monday, hovering near its highest level in two years. Last week, the currency depreciated more than 2% against the US dollar.

The won is the worst-performing currency in the region, down almost 10% so far in 2024.

South Korea’s political crisis escalated after prosecutors opened an investigation on Sunday against President Yoon Suk Yeol over his failed attempt to impose martial law in the country last week. Yoon survived an impeachment vote in the opposition-controlled parliament on Saturday, but the head of his own party said Yoon would be sidelined before he ultimately resigned.

Asian currencies, already weakened by a strengthening dollar and fears of a U.S.-China trade war under up-to-date U.S. President Donald Trump, are under further pressure due to political instability in South Korea. The country is seen as a pillar of the East Asian economy.

The Taiwan dollar pair rose 0.3%, while the Singapore dollar pair rose 0.1%.

The Australian dollar pair was largely unchanged ahead of Tuesday’s Reserve Bank interest rate decision. The RBA is expected to leave interest rates unchanged but may ease its hawkish stance amid signs of weakening economic conditions in Australia.

The Indian rupee pair rose 0.1% after the Reserve Bank of India cut a key bank reserve ratio on Friday to boost liquidity amid signs of cooling in the Indian economy.

Japan’s GDP, China’s CPI in focus

The Japanese yen pair was largely unchanged as investors remain divided on whether the Bank of Japan (BOJ) will raise interest rates next week following Monday’s economic growth reading.

Revised data (GDP) showed the Japanese economy grew slightly more than expected in the third quarter. However, the reading was much lower than the previous quarter’s growth.

The onshore Chinese yuan pair rose 0.3% after data showed China contracted more than expected in November despite recent stimulus efforts. it also remained at a low level in November.

This week, attention will turn to China’s annual Central Economic Work Conference (CEWC) for guidance on further stimulus measures from the country’s central bank.

Dollar stable ahead of US inflation, Fed expected to cut interest rates next week

The indexes increased by 0.1%, although they also increased slightly during Asian hours.

U.S. inflation data for November will be released on Wednesday and could provide insight into the trajectory of Federal Reserve interest rates.

Markets expect the Fed to cut interest rates by 25 basis points next week, even after Friday’s data showed they rose more than expected in November.