Asian currencies reach the highest level in 6 years

Asian currencies may post their strongest monthly gains in more than 6 years, supported by expectations that the Federal Reserve (Fed) has reached the end of its rate hike cycle.

The Bloomberg JPMorgan Asia Dollar Index, which measures the performance of the dollar in Asia and is compiled by JPMorgan in collaboration with Bloomberg News, rose 2.7% in November and is expected to continue to do so. The South Korean won posted its best monthly performance since March 2016, rising 7%, followed by a 6.8% increase in the Thai baht.

Singapore-based head of strategy for Asia at Skandinaviska Enskilda Banken AB, said, “Although the Fed has communicated to the market that it will continue to raise interest rates, the dollar’s rally is beginning to signal that it is coming to an end. Asian currencies have a chance to gain strength again, after a significant depreciation this year.”

Asian currencies remain vulnerable to risks from the COVID-19 outbreak in China after Chinese citizens protested COVID-19 containment measures in various cities.

Investors are watching the Chinese government’s stance to assess the situation. This unrest will cause China to take stricter measures, or it may push the Chinese government to end the zero COVID policy.

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