Asian FX Performance Stays Muted While The Yen Pushes Higher Due To Bets On BoJDecember 22, 2022
With every passing day, the fear has been growing on a global scale about the recession. A month back, the predictions were just for the United States as it constantly pumped the interest rates.
Fear of a Global Recession
However, the situation has changed in a matter of 30 days and the fear is no longer restricted to the world’s largest economy.
People from around the world have the same period for the global economy, which is constantly rising. It must be clarified that most countries around the world are already facing a major economic loss.
It is the world’s largest economies such as the United States, China, Japan, South Korea, Germany, and many more that account for the global economy.
It is these countries that are also living under the fear of economic recessions. If these countries face a recession, the entire world will be engulfed by them, pushing the situation in the worst direction.
Fear of the Pandemic
If one fear was not enough, the pandemic fears are reemerging as well. Although the entire world has gotten out of the pandemic, China is still fighting it with all of its resources combined.
Still, the COVID-19 cases are not going down. There are some days when the reports are fewer but they are not ending at all. The COVID-19 fear is increasing all over China and now there are reports of variants.
This is an even more concerning matter than the Chinese government and the medical departments had thought of in the country.
With every passing day, people are growing concerned about COVID-19 spread. Countries are fearing that COVID-19 may find itself again in their jurisdictions.
Given the amount of damage and the downfall the world has faced due to the recent pandemic, it will be extremely difficult for the world to face another pandemic.
The fear is constantly rising among the neighboring countries of China such as Pakistan and India of a COVID-19 variant finding its way to these lands.
If the pandemic does spread again, the global markets will collapse to a point where it will be extremely difficult for them to recover.
The Asian Currencies are facing the Impact
While the west is only worried about the recession, the Asian countries have the Chinese pandemic situation at hand as well. Therefore, not many countries in Asia are able to see significant surges in their trade.
The Asian forex market is also reacting to the ongoing fears by not moving at all.
The Japanese Yen Performs
Amidst all the chaos in the Asian market, it is the yen that seems to be demonstrating a positive performance. It is because of the recent developments involving the Bank of Japan (BoJ) and the interest rates.
It is being claimed by many local and international economists that the BoJ may increase the interest rates to fight off the inflation hikes.
If Japan does it, then it may also be able to control its rising inflation rates. However, the fear of recession may also rise in the country.
No matter the ultimate outcome, the trading price of the yen has already found strong ground. The investors are excited about the reports and are strongly anticipating the interest rate hikes.
If that happens, the value of the Japanese yen would continue surging, making things quite interesting for the yen traders.
Following the announcement, the value of the yen has surged by 0.4% and it currently trades at 136.18.
Finally, after a long time, the Japanese government has decided to control the rising inflation rates in the right manner.
Other Asian Currencies and the DXY
The report shows that the value of the South Korean won has surged 0.8% versus the dollar, moving up to 1,300.31.
The value of the Chinese yuan has fallen 0.2% against the dollar while the DXY has recorded a 0.1% dip against the major currencies.