Asian currencies gain momentum because of the weakness of the dollar

Some Asian currencies see a strong increase in US dollar weakness, to record rare record levels, and requires a direct intervention of central banks to reduce excessive profits. The ‘Hong Kong Monetary Authority’ sold a record amount of the local dollars on Friday to prevent the rise in the currency, and to protect the currency connection with the US dollar of 42 years. The central bank also intervened in Taiwan after its currency has seen its strongest increase since 1988. The Chinese Yuan, who spread outside China, has jumped to the strongest level since November. These fluctuations reflect how escaping from the global reserve currency can lead to profound consequences in the financial markets, in light of the volatile customs duties of President Donald Trump, which arouses the fear of economic stagnation in the United States. Last week, the speculators have become more pessimistic about the dollar since September, which is an indication of the increasing reluctance of investors in maintaining US assets. Asian currencies such as the Yen and the Yuan benefit from a mix of money returning to the homeland, and considered alternative investments, in the light of the wave of the sale of US assets. This strategy seems to be quiet, even with indications to mitigate the positions between the two most important parties in the trade war, as Beijing said it evaluates the possibility of discussions with the United States. “The natural exit of this trading tension lies in shrinking the dollar,” says Brad Pecit, head of global trading in foreign currencies at Jeffrez. He added: “Therefore, it may be logical to prepare for the further decline in the dollar against Asian currencies.” The exchange markets see violent fluctuations that the Asian foreign exchange market saw serious fluctuations on Friday, as the “Bloomberg” index has jumped to the currencies of the region since 2022, while the returns index is closed to the highest level in emerging exchange markets. The power of currencies in emerging markets can attract foreign flow and make imports cheaper, but it can damage exporters by reducing the competitiveness of their goods in the global markets. On Friday, the Taiwanese currency has the profits in Asia, with a 3%increase, amid the flow of foreign investment to the local stock market, in light of the expectations of the ongoing strong US demand for semiconductors produced on the island. The currency profit accelerated with the local exporters selling the dollar in a feverish way, amid bets on the continued decline, according to what traders were reported that asked not to reveal their identity. This rapid increase has urged the Taiwanese central bank to issue a statement stating that it is ‘entering the market on time’ to control price movements. In the options market, traders have become most optimistic about the Taiwan currency since 2008. Asian exporters have ceased the dollar similar to their peers in Taiwan, and Chinese exporters no longer see a safe haven in the US Treasury effects amid the increase in commercial stress. A poll conducted by “Bloomberg” showed that they prefer to keep the yuan instead of picking up dollars. “With the pressure of the dollar and the chances increased to reduce interest in light of the high risk of stagnation in the United States, the balance of risks and returns to maintain deposits in dollars has completely different for Asian exporters,” the analysts of ‘Goldman Sachs’ wrote, led by Kamakchia Trevicy, in a note. They added that currencies such as Yuan, the Taiwanese dollar and Malaysian Singet are a candidate for more height. The Hong Kong currency ascended on Friday to the strongest level allowed within its trade scope of 7.75 to 7.85 against the US dollar. This forced the city’s central bank to buy $ 46.5 billion, Hong Kong ($ 6 billion) to weaken the exchange rate, which is the largest registered intervention of its kind. Elsewhere in Asia, the South Korean won, the Malaysian Singhit, and the Thai coffin jumped by more than 1%. The internal Chinese markets are closed for holidays, and the trades will resume on Tuesday. The fear of inflation and stagnation has shifted the markets, and the allocation of funds from the dollar to Asian currencies was a factor behind the rise of these currencies. Over the past month, the dollar has fallen parallel to the decline in long -term tournament bonds and US equities, amid concerns that the customs of Trump could feed local inflation, harm the economy and prevent federal reserve from reducing interest rates. Asian purchases of currencies strengthened on Friday, against the background of the hope that trade relations between the two largest economies in the world will be improved. This comes after the Chinese Ministry of Commerce said it noticed the repetition of the expression of senior US officials about their willingness to dialogue with Beijing on the fees. Pessimism over the dollar continues, despite the release of stronger US work data expected on Friday, Wall Street still expects anxiety over the dollar. The Goldman Sachs Group said the recruitment report “was a reflection of what could have happened, and not an indication of what would happen.” Strategists wrote in Morgan Stanley by David S. Adams in a note: “We expect the dollar to fall with the escalation of the US yield curve and the ongoing hedging of US investment.” The company expects the euro and the yen to rise.