Investing.com — Most Asian currencies fell on Tuesday and headed toward annual losses as the dollar remained strong heading into 2025, while the Chinese yuan weakened after data showed factory activity in the country expanding at a slower pace.
The index was 0.1% weaker in Asian trading but remained near the two-year high it reached earlier in the month. The index also fell.
Asian currencies have fallen sharply this year, as the Federal Reserve's interest rate forecasts and concerns about a potential trade war between the United States and China under a Donald Trump administration erode risk sentiment.
The Fed's recent signal of tapering in 2025 has provided renewed strength to the dollar and created downward pressure on Asian currencies.
The Chinese yuan declines as factory activity expands at a slower pace than expected
The onshore Chinese yuan pair rose 0.2% on Tuesday, while the offshore pair was largely unchanged.
China's economy expanded for a third straight month in December as a raft of new stimulus measures continued to provide support, PMI data showed on Tuesday. However, the rise was slightly below market expectations and lower than the previous month's reading.
Markets are awaiting more clarity on Beijing's plans for stimulus measures next year. Recent reports indicated that the country will increase fiscal spending to support economic growth.
Asian currencies brace for annual declines
The Japanese yen pair fell by 0.3% today, Tuesday, after reaching its highest level in five months in the previous session. The yen is set to lose more than 10% against the US dollar this year.
The Singapore dollar pair was largely unchanged, but trended towards an annual rise.
The Australian dollar fell slightly on Tuesday.
The Indian rupee pair rose 0.1%, and was on track to rise more than 3% this year. The rupee hit new highs against the US dollar this month.
The Thai baht pair rose 0.3%, while the Indonesian rupiah pair rose 0.2% on Tuesday.
South Korea won by slips amid deepening political turmoil
The South Korean won pair rose 0.1% on Tuesday. The won fell nearly 6% against the US dollar in December, which saw the failure to impose martial law in the country.
The won is the worst-performing currency among its Asian peers, tracking a depreciation of more than 12% in 2024.
In the latest updates, a South Korean court on Tuesday approved an arrest warrant for President Yeon Suk-yul, who was impeached and suspended from office following his Dec. 3 decision to impose martial law.
The Seoul Western District Court approved the arrest warrant requested by investigators probing Yoon's brief imposition of martial law, the Senior Officials Corruption Investigation Office (CIO) said.
