Asian Currencies Battered by US Dollar's Strength Throughout 2022

The strengthening of the United States (US) dollar against major world currencies has impacted Asian currencies, including the Indonesian Rupiah.

The US Federal Reserve (The Fed)'s move to raise its benchmark interest rate to curb inflation has fueled the US dollar's strength against major world currencies, including Asian currencies.

The Kyat (Myanmar) is the Asian currency that has weakened the most this year, depreciating by 35.48% to 2,097.55 per US dollar as of December 21, 2021.

The next most significantly weakened regional currencies are the Japanese Yen (13.12% to 132.46 per US dollar), the Chinese Yuan (8.96% to 6.98 per US dollar), and the Indonesian Rupiah (8.5% to 15,588 per US dollar).

Following these are the Philippine Peso (7.47% to 55.11 per US dollar), the South Korean Won (7.45% to 1,285.7 per US dollar), and the Malaysian Ringgit (6.12% to 4.44 per US dollar).

Similarly, the Thai Baht weakened by 4.73% to 34.73 per US dollar, the Vietnamese Dong depreciated by 3.78% to 23,723 per US dollar, and the Singapore Dollar weakened by 0.18% to 1.35 per US dollar.

Rising energy and food commodity prices due to the Russian invasion of Ukraine have triggered high inflation in various countries, including the US. US inflation even reached its highest level in four decades at 9.1% (year-on-year/yoy) in June 2022.

This inflationary pressure led The Fed to adopt a monetary tightening policy by raising its benchmark interest rate. Throughout the year, The Fed has raised its interest rate seven times by a total of 425 basis points (bps) to a range of 4.25-4.5%.