China’s yuan fell to 7.3698 per USD, its weakest level since October 2022, as the dollar’s strength continues to weigh on Asian currencies.

Key Highlights:

Yuan Weakness:

• The onshore yuan struggled near the 7.3 level throughout December, finally crossing it on the last trading day of 2024.

• The People’s Bank of China set a fixing rate of 7.1879 on Thursday, indicating efforts to stabilize the currency.

Wider Impact Across Asia:

• Japanese yen fell below 158 per USD, hitting a 5-month low.

• Vietnamese dong traded at a record low of 25,480 per USD.

• South Korean won plunged to over 1,480 per USD, marking a 15-year low.

Drivers Behind the Decline:
Strong US Dollar:

• Expectations of fewer rate cuts by the US Federal Reserve in 2025 are boosting the dollar.

• Concerns over Trump’s trade policies are creating additional uncertainty.

Asian Economies Under Pressure:

Political instability in South Korea and economic challenges in other nations are amplifying currency weakness.

The strengthening US dollar is expected to keep pressure on Asian currencies into 2025, with the region bracing for continued volatility.