The US dollar is showing no mercy to local currencies and making them slide to new yearly lows. Leading Asian currencies in particular are facing the wrath of a stronger USD in the forex markets.
The Bloomberg Dollar Spot Index climbed 0.5% indicating that the USD could dominate the currency markets this month. The indication turned true as the US dollar beat all local currencies including the Chinese yuan, Indian rupee, and Japanese yen.
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The US Dollar Makes Local Currencies Slide
The Indian rupee fell to its lowest at 83.73 last week and is now at 83.71 on Tuesday’s opening bell. Analysts have warned that if the rupee dips below 83.80, India’s import and export sector could face a jolt. The development will lead to higher prices and make inflation rampant in the country.
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Coming to the Chinese yuan, the currency has dipped to its seven-month low against the US dollar. This comes even after the Communist country kick-started the global de-dollarization campaign in 2022.
In addition, Asia’s leading currency, the Japanese yuan has fallen to its 1990s low against the USD. The yen is losing its spine and is unable to climb up even after intervention from its central bank. The US dollar is reigning supreme making all leading local currencies slide in the charts.
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Out of 23 leading Asian currencies, the USD has outperformed 22 of them. Only the Hong Kong dollar has managed to stay afloat and beat the USD by a small margin.
The higher Treasury yields pushed the US dollar to the top of the charts weakening all local currencies. Additionally, currency traders have been buying the dips on the USD regularly cementing its resistance level. The move makes the US dollar bounce back harder and take on leading Asian local currencies in the forex markets.