The Kip plummeted 33%, leading the decline among Asia-Pacific currencies through October 10, 2022.

The United States Federal Reserve's (The Fed) decision to raise its benchmark interest rate to curb inflation has fueled the strengthening of the dollar.

The increase in US interest rates has made the US dollar a safe haven for investment funds. Investments in US dollars are now sought after by global investors. One example is US Treasury Bills.

The US Treasury Note with a 2-year tenor has reached 4.32%. This figure is up 358.6 basis points (bps) compared to its position at the end of last year (year to date/ytd). This has led global investors to prefer investing in US dollars, causing other world currencies to weaken.

Based on data from Asia Bonds Online, the Lao Kip is the currency in the Asia-Pacific region most affected by the appreciation of the US dollar. As of October 10, 2022, the Lao Kip has weakened by 33.14% to 16,746.86 per US dollar from its position at the end of last year. This means that the country's currency has eroded by about a third this year (year to date/ytd).

The next most significantly weakened Asian currencies are the Japanese Yen, down 21.03% to 145.72 per US dollar, followed by the South Korean Won, which has also corrected by 16.61% to 1,426.84 per US dollar.

Similarly, the Indonesian Rupiah has weakened by 6.89% to Rp15,318 per US dollar. In the Jakarta Interbank Spot Dollar Rate (JISDOR), the Rupiah exchange rate has been traded above the psychological level of Rp15,000 per US dollar since September 21, 2022.

Meanwhile, the Hong Kong dollar is the Asia-Pacific currency that has experienced the least pressure against the US dollar, weakening by only 0.68% to 7.85. Following this is the Cambodian Riel, which weakened by only 1.29%.