Asian Currencies Steady as Fed Path Watched; China Holds Rates Unchanged
Most Asian currencies traded flat on Monday, while the US dollar extended last week’s rebound. The Chinese yuan also stayed muted after the People’s Bank of China (PBOC) left lending rates unchanged, as widely expected.
The US Dollar Index, which tracks the greenback against a basket of major currencies, edged 0.1% higher after bouncing sharply from three-year lows last week. Dollar Index futures were also up 0.2% as of 04:07 GMT.
Dollar Holds Gains After Fed Cut
The dollar strengthened following the Federal Reserve’s 25-basis-point rate cut last week. However, Fed Chair Jerome Powell signaled caution, stressing that persistent inflation and a weakening labor market require a measured approach to future cuts.
Markets now await a busy week of speeches from Fed officials. Around 10 policymakers, including Powell, are expected to provide fresh insights into the US economic outlook. Fed Governor Stephen Miran, who recently called for a larger rate cut, is likely to outline his position in more detail.
Asian Currencies Remain Rangebound
Regional currencies saw muted moves as traders awaited clearer signals from the Fed. The Japanese yen (USD/JPY) rose 0.2%, while the Singapore dollar (USD/SGD) was flat. The South Korean won (USD/KRW) slipped 0.4%, moving against the broader trend.
The Indian rupee (USD/INR) inched up 0.1%, while the Indonesian rupiah (USD/IDR) gained 0.3%. The Australian dollar (AUD/USD) was little changed, after Reserve Bank of Australia Governor Michele Bullock said recent data broadly matched expectations, though global uncertainty persists.
China Keeps Lending Rates Steady
The PBOC kept its benchmark loan prime rate (LPR) unchanged on Monday, maintaining the one-year rate at 3.0% and the five-year rate at 3.5%. Despite sluggish retail sales and weak factory output, the central bank maintained its policy stance, likely awaiting the October Fourth Plenary Session for possible adjustments.
The onshore yuan (USD/CNY) was stable, while the offshore yuan (USD/CNH) edged 0.1% lower.
