China will change the way it calculates a key yuan index in the new year, nearly doubling the number of foreign currencies in a basket that is used to set the yuan’s value, its foreign exchange market operator said.
The offshore yuan in Hong Kong dropped to a fresh low morning as it broke 6.98 per US dollar.
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The dollar rose to its highest of the week before paring gains slightly, trading within striking distance of the December 20 high that was the highest since 2002 as measured by the DXY index, amid sometimes choppy price action, thin liquidity and sporadic order flow.
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Expectations US inflation and growth will outstrip the rest of the developed world’s prodded the dollar higher across the board, knocking half a cent off the euro and driving sterling to a two-month low.
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Most Asian currencies inched higher, getting some respite as US bond yields declined and the dollar lost a bit of steam.
A large foreign reserve buffer, sound economic fundamentals, low exposure to foreign debt and limited foreign holdings of local bonds and equities will help Thailand avoid following in the footsteps of the ringgit rout and massive capital flight from Malaysia, say economists and market experts.
With negotiations for the formation of a new government at a standstill, the Romanian RON took a battering against the main foreign currencies.
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Some 81 outlooks put the Japanese currency from ¥97 to ¥128 to the dollar at the end of next year.
A dwindling supply of dollars in international FX markets, due to falling FX reserves, is providing underpinning support for the dollar into the end of the year, says Societe Generale’s FX strategist Kit Juckes.
A dollar retreat helped emerging stocks rise to 10-day highs and currencies strengthened, led by the rouble which appeared on the cusp of breaking under 60 per dollar for the first time in 14 months.
The Canadian dollar firmed slightly against its US counterpart as the price of oil, a key Canadian export, held near highs not seen since 2015.
The rupee was trading at 68.12 per US dollar—up 0.18% from its previous close of 68.24.