The depreciation of Asian currencies against the US dollar is dominating the market landscape across Asia on Thursday, with investors closely watching the Bank of Japan’s two-day policy meeting that gets underway today. South Korea’s first-quarter GDP, Malaysian consumer price inflation for March, and the latest trade figures from Vietnam and Hong Kong are also expected to provide insights into the region’s economic health.
Sentiment in the region remains fragile, with some stock markets having recovered only around half of their recent losses. The slump in Meta shares after the U.S. tech giant’s earnings report on Wednesday is casting a cloud over the markets, while U.S. bond yields have spiked following a weak auction of five-year notes.
The unease surrounding currencies deepened after the dollar smashed through 155 yen on Wednesday, with Japanese authorities yet to signal any intention to slow or reverse the yen’s decline. While an executive from Japan’s ruling LDP told Reuters that the party is not yet actively discussing intervention levels, a continued slide towards 160 or 170 to the dollar could trigger action.
Indonesia’s surprise rate hike to counter the weakness of the rupiah caught many market participants off guard, with the currency bouncing modestly afterwards. However, grumbles across Asia are growing louder over Tokyo’s reluctance to anchor the yen, which is giving Japan a huge competitive boost.
The yen’s weakness against the currencies of China, South Korea, Thailand, Vietnam, and others is becoming a major concern, prompting intervention by India’s central bank to support the rupee and comments from Bank of Thailand officials suggesting intervention to ease excessive moves in the baht.
Amidst the economic and currency market developments, geopolitical tensions between the United States and China continue to simmer. The U.S. Senate has voted in favor of legislation that would ban TikTok in the United States if its Chinese owner ByteDance fails to divest the popular short video app within the next nine months to a year.
