Chinese Yuan Surpasses 7 Per Dollar As Recession Fears Hit Asia FX By

© Reuters.

By Ambar Warrick– Most Asian currencies fell on Friday, with the Chinese yuan slipping past an important psychological level as concerns over rising interest rates and a possible recession dampened appetite for regional assets.

The dollar slipped 0.2%, breaking through level 7 against the dollar for the first time in more than two years, as investors continued to worry about slowing growth in the world’s second-largest economy.

Friday’s data showed the Chinese had their worst monthly decline in nearly seven years, with August falling 1.3%. China’s debt-ridden property market accounts for the bulk of its economic growth and has come under extreme pressure from a liquidity crunch this year.

The weak data offset other readings that showed stronger than expected growth in Chinese and August.

A series of COVID-related lockdowns have brought Chinese economic activity to a halt this year, putting pressure on the yuan. This spurred several stimulus measures by the government to support growth, which in turn further weakened the yuan.

But several recent corrections to the yuan’s midpoint by the People’s Bank of China suggest the government is not ready to let the currency depreciate further.

Most other Asian currencies fell on Friday, under growing fears of a global economic recession following warnings from the World Bank and International Monetary Fund.

Expectations of heavy interest from the US Federal Reserve next week also weighed on regional currency markets as the country showed few signs of slowing down. The rest pinned near 20-year highs.

The rise of 0.1% after the government reiterated its commitment to limit further losses in the currency.

But the yen was heading for its fifth straight week of losses, hovering near 24-year lows on a widening divide between local and international interest rates. The rising cost of energy imports into Japan also weighed on the unit.

Most other Asian currencies also suffered weekly losses against the dollar, as the prospect of higher US interest rates gave the space little respite.

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