Asia’s central bankers are bracing for more turbulence from a stronger US dollar as the receding prospect of US interest rate cuts this year sends shockwaves through the yen, renminbi and other regional currencies.
Policymakers in Japan, China and South Korea have all talked up the stability of their currencies in recent days as they weaken under the intense pressure of the gap between the US’s high rates and the low rates that underpin Asia’s biggest economies.
Investors’ flight to higher-yielding US assets has sent the yen to a 34-year low past ¥154 to the dollar and has also tested Beijing’s stable currency policy as the renminbi’s value to the dollar fell below the central bank’s daily reference rate. The won hit its weakest level against the greenback since November 2022.