Asia FX Slammed by Recession Jitters, Yen Slips Above 150 on Hot CPI By

By Ambar Warrick – Asian currencies fell sharply Friday. The Japanese yen hit a new 32-year low against USD as a spike of Treasury yields and growing concerns about a U.S. recession drained the appetite for risk-heavy assets.

After data showing that the Japanese had hit an eight-year high, the pound dropped 0.1% to 150.29 to dollar. This was a 32-year record. The reading points to more pressure on the world’s third-largest economy in the coming months, and will also provide headwinds to the as it struggles to maintain its accommodative stance.

The Japanese government did not threaten to intervene in foreign exchange markets, but short sellers of the yen did not seem to be discouraged. The government’s intervention in September had only temporarily paused the yen’s descent, which is down nearly 31% this year. The Japanese currency will also lose 1% this week, marking its tenth consecutive week of losses.

Friday’s 0.4% drop in the dollar led to a close to a 14-year low for the currency. This was due to growing uncertainty about the Chinese economy following the delay of key third quarter GDP data. Close to record lows, the index fell 0.1%.

Reports of easing quarantine measures in Beijing did little to lift sentiment towards the country, given that President Xi Jinping signaled earlier this week that China’s strict zero-COVID policy is here to stay.

After a series of hawkish comments by Federal Reserve officials, a spike in U.S. Treasury Yields this week was devastating for Asian currencies. The hovered close to record lows while the led losses in Southeast Asia with 0.6%. The fell 0.2% on Thursday, after the central bank raised its base by 50 basis points.

Philadelphia Fed President Patrick Harker warned that the central bank is actively trying to slow the economy to combat , fueling concerns that rising U.S. interest rates will trigger a recession in the world’s largest economy.

His comments contributed to a rally of Treasury yields, which rose 0.9% to their highest level since 2008’s financial crisis.

The remained steady at the 113 level on Friday as did the. However, the greenback was expected to suffer mild weekly losses.

Other markets fell 0.3% in volatile trade following the resignation of Liz Truss, the UK Prime Minister, after just six weeks in the position. The yields on gilt rose nearly 2%

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