Asian Currency

Dollar slips as Asian currencies gain support- Republic World

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Dollar currency movement: The Dollar experienced a decline on Monday, influenced by the potential for currency intervention from Japanese authorities and a government-driven rally in China’s Yuan, exerting downward pressure on the US currency.

In Asian trading, the Japanese Yen exhibited slight gains, with the currency standing at 151.29 per Dollar, after touching a four-month low of 151.86 last week. Japanese officials have heightened warnings over the Yen’s depreciation, expressing concerns that its weakness does not align with underlying economic fundamentals.

Despite the Bank of Japan’s decision to raise interest rates out of negative territory last week, traders anticipate that interest rates in Japan will remain low for an extended period. This expectation, coupled with the significant interest rate differential between Japan and the United States, continues to bolster the appeal of the Dollar.

“The Yen’s recent resilience, fueled by Japanese officials’ verbal intervention, has created a strong near-term resistance for the Dollar/Yen pair,” commented Carol Kong, a currency strategist at Commonwealth Bank of Australia.

Meanwhile, the Dollar index, which measures the performance of the Dollar against a basket of major currencies, experienced a marginal decline of 0.1 per cent to 104.35, following a weekly gain of nearly 1 per cent the previous week.

The most notable movement in FX markets on Monday was observed in China’s Yuan, which surged approximately 0.3 per cent in onshore markets and 0.4 per cent in offshore trading against the Dollar. Sources revealed that major state-owned banks in China were actively selling Dollars for Yuan in onshore markets, reversing a sudden decline witnessed at the end of the previous week.

In Europe, currencies staged a modest recovery after facing downward pressure last week, fueled by investors’ preference for the Dollar amid indications that the Federal Reserve is less inclined to implement rate cuts compared to its global counterparts.

Expectations for rate cuts by the European Central Bank and the Bank of England have escalated, following the Swiss National Bank’s decision to lower borrowing costs last week. European currencies demonstrated resilience, with the Euro rising 0.1 per cent to $1.0818 and Sterling climbing 0.08 per cent to $1.2611.

Elsewhere, the Australian Dollar saw a gain of 0.21 per cent to $0.6528, while Bitcoin experienced a notable increase of 5.6 per cent to $67,030, albeit down from its record high above $73,800 on March 14.

(With Reuters inputs.)

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