As Fed doves and Singapore growth worries weigh, Asian FX falls!

On Thursday, Asian currencies declined as the dollar rose on promises from Federal Reserve officials to keep raising rates despite a cooling of inflation. A weakening GDP prognosis for Singapore also played a role.

The Japanese yen fell by 0.2% while the Chinese yuan dropped by about 0.3%. After recording minor gains on Wednesday, the majority of other Asian currencies were trading negatively.

The U.S. dollar index increased by 0.2% as of 23:21 ET (03:21 GMT), following a 1.1% drop on Wednesday.

After a comparable band of losses, dollar index futures were up 0.2%.

Neel Kashkari, president of the Minneapolis Fed, stated that although Wednesday's U.S. inflation report was better than expected, the central bank would continue to tighten policy until its inflation target is reached.

As a result, the target rate might increase to 4.4% by the end of the year.

While Kashkari is thought to be the Fed member who is the most hawkish, others anticipate that interest rates will continue to rise, albeit more slowly.

Following the release of the data, stock markets rose, with traders now projecting a 50 basis-point increase by the Fed during its upcoming meeting, down from earlier estimates of a 75-point increase.

The Singapore dollar decreased 0.1% in Asia as the island nation reduced its projection for annual economic growth from 3% to 5% to 3% to 4%.

Additionally, the nation reduced its second-quarter GDP estimate, citing heightened challenges from the weakening of the world economy.

China, Singapore's main commercial partner, is the source of the majority of these headwinds.

After many COVID-19 lockdowns this year, the mainland economy is still working to recover.

After the central bank increased rates on Wednesday and began a cycle of monetary tightening, the Thai baht was unchanged.

As the outlook for the Thai economy has improved, the baht has steadily rebounded from the lows it reached this year.

The central bank also hinted at the necessity for gradual rate increases to tame the inflationary crisis.

The Indonesian rupiah increased 0.5% as a result of a drop in oil prices.

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