Dec 31 2024:Â Asian currencies edged lower on Tuesday, closing a challenging year marked by a strong U.S. dollar and subdued risk sentiment. The dollar remained near its two-year high despite slight weakness in Asian trade, as markets anticipated 2025 Federal Reserve policies.
The US Dollar Index eased 0.1% but retained its firm position, bolstered by the Fed’s outlook for fewer interest rate cuts in 2025, which added pressure on Asian currencies.
Chinese Yuan Slips on Slower Factory Activity Growth
The Chinese yuan weakened, with the onshore USD/CNY pair rising 0.2% and the offshore USD/CNH pair staying steady. China’s manufacturing activity expanded for a third consecutive month in December, supported by stimulus measures, but growth was slower than expected, disappointing market hopes. Investors are watching Beijing for further clarity on its 2025 economic stimulus plans.
Broad Yearly Losses Across Asian Currencies
The Japanese yen (USD/JPY) fell 0.3% after a recent five-month high, recording an annual decline of over 10% against the U.S. dollar.
The Singapore dollar (USD/SGD) remained steady, heading for a slight annual rise, while the Australian dollar (AUD/USD) weakened on Tuesday.
The Indian rupee (USD/INR) edged up 0.1% and is on track for a more than 3% annual decline, hitting record lows against the dollar this month.
The Thai baht (USD/THB) rose 0.3%, and the Indonesian rupiah (USD/IDR) gained 0.2%, both continuing to face pressure from a strong dollar.
South Korean Won Weakens Amid Political Instability
The South Korean won (USD/KRW) slipped 0.1%, marking nearly a 6% decline in December and over 12% for the year—making it the worst-performing Asian currency in 2024. Political turmoil deepened as a South Korean court approved an arrest warrant for President Yoon Suk Yeol, who had been impeached and suspended following his December 3 martial law declaration.
The Corruption Investigation Office for High-ranking Officials (CIO) reported that the Seoul Western District Court issued the warrant as part of an ongoing investigation into the martial law controversy.
