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The offshore yuan, the currency variant that circulates outside China, fell as much as 0.2% to 7.2790, its weakest level against the dollar, before recovering slightly to trade positive. The currency and its onshore counterpart have been hit by renewed selling pressure this week amid growing uncertainty over the Chinese economy. Both units are down about 0.6% this week.
China indefinitely postponed the release of key trade and economic growth data this week. President Xi Jinping also said China has no plans to ease its strict zero-COVID policy, which has caused much of the country’s economic disruption this year. The worsening economic trend in China has dampened sentiment toward most Asian markets, given the country’s role as a major trading partner for the region.
Broader Asian currencies fell on Thursday as expectations of a sharper interest rate hike by the Federal Reserve grew, boosting the dollar and Treasury yields.
The Singapore dollar fell 0.2%, while the Indonesian rupiah was the worst performer in Southeast Asia, down 0.5%. The Indian rupee hit a record low of more than 83 to the dollar.
The Japanese yen is trading around 32-year lows and is set to break above the psychologically important 150 level against the dollar.
Trade data released on Thursday showed some improvement in Japan's record deficit, but also showed that pressures from rising commodity prices and a weak yen continued to weigh on the economy.
The dollar index rose above 113 overnight, as did dollar index futures. The 10-year Treasury yield rose nearly 4% to its highest level since the 2008 financial crisis. Fed officials signaled earlier this week that the central bank could raise interest rates even more than expected if inflation remains high.
Their comments also came after data last week showed US inflation remained high through September, despite a series of interest rate hikes by the Fed this year.
Rising interest rates have been the biggest source of selling pressure on Asian currencies this year, and are expected to continue to weigh on regional sentiment in the coming months.
Among the Antipodean currencies, the Australian dollar fell 0.5% after data showed the country’s jobs market slowed more than expected in September. Weakness in employment could spur a smaller interest rate hike by the central bank.
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