Asian currencies recover weekly losses

Friday,   26-May-2023   12:46 PM (IST)

Most Asian currencies rose on Friday, recovering from steep losses, while the dollar steadied below two-month highs as markets awaited more cues on progress towards raising the debt ceiling. The Japanese yen rose 0.2%, but was among the worst-performing Asian currencies this week, down nearly 2% as expectations of a wider gulf in local and U.S. interest rates dented the currency. Softer-than-expected Tokyo inflation data on Friday spurred more expectations that the Bank of Japan will hold off on tightening policy this year, although the reading was still well above the BOJ’s 2% annual target. The Chinese yuan rose 0.3%, rebounding from a near six-month low. The yuan was battered by concerns over a slowing economic rebound in China, as well as deteriorating ties between Beijing and Washington following a ban on Chinese sales of U.S. chipmaker Micron Technology Inc. Fears of a new COVID-19 outbreak in China also rattled sentiment.  The South Korean won rose 0.5%, while the Taiwan dollar added 0.4%. The Australian dollar rose 0.1%, but was close to a seven-month low as data on Friday showed that retail spending slowed in April amid increasing pressure from high inflation and interest rates. Markets are awaiting a breakthrough in negotiations to raise the U.S. debt ceiling and avoid a government default, although lawmakers have given few signals that an agreement is imminent.