The major Asian currencies, which were previously seen as potential challengers to the supremacy of the US dollar, are now facing significant difficulties in the currency markets.
The US dollar has sharply increased its strength in all indices this week, leading to significant declines in local currencies such as the Chinese yuan, the Indian rupee and the Japanese yen.
The index Dxy, a key indicator of the US dollar’s performance, is currently hovering around the 105.6 mark, after hitting a high of 106.07 points and weakening slightly earlier in the week. Notably, currencies such as the rupee, yuan and yen have hit new lows against the US dollar in recent days.
For example, the Indian rupee fell to an all-time low of 83.61 against the US dollar at the close last week, only to recover marginally to 83,43 early this week.
Similarly, the Chinese yuan fell to its lowest point in five months, trading at 7.2 per dollar, not seen since December 2023, with 2024 alone seeing a remarkable 1.9% decline since the start of the year.
Meanwhile, the Japanese yen also saw a significant decline against the US dollar this month, collapsing to 153,82.
Against this backdrop, escalating tensions between Iran and Israel further unsettled Asian markets, with India, China, Japan and broader Asian stock markets all posting declines at the start of the week.
Investors are concerned that continued geopolitical unrest could add to market volatility, leading to further declines.
