The Indian rupee hovered around 94.7 per dollar, extending its recent losses as rising US Treasury yields strengthened the greenback and weighed on Asian currencies. Higher bond yields dampened demand for emerging-market assets, while renewed dollar buying and weaker regional currencies kept pressure on the rupee. Market sentiment remained cautious after stronger-than-expected US labor market data reinforced expectations that the Federal Reserve could keep interest rates higher for longer. Investors are now awaiting additional US employment data for further clues on the Fed’s policy outlook. Meanwhile, higher oil prices added another headwind for the currency, as firmer crude prices typically increase India’s import bill and demand for dollars. Oil gained support after a Qatari official said US envoys in Doha would not hold high-level talks with Iran, casting doubt on near-term diplomatic progress and reducing expectations of a potential increase in Iranian oil supplies.
South Korean Won Weakens Toward 17-Year Low
The South Korean won weakened to around 1,557 per dollar, approaching its weakest level since March 2009 near 1,560 touched earlier in June, as persistent foreign selling of local equities and broad demand for the US dollar weighed on the currency. Overseas investors remained net sellers of Korean stocks for an eighth consecutive session, extending a wave of capital outflows as global funds trimmed exposure to Korean technology shares. The won also came under pressure from a firmer US dollar after stronger-than-expected US labor market data pushed Treasury yields higher and reinforced expectations that the Federal Reserve could raise interest rates later this year. Meanwhile, South Korea reported record trade data for June, with exports surging 70.9% year-on-year to $102.25 billion, marking the first time monthly shipments exceeded $100 billion. The trade surplus widened to a record $36.15 billion, as semiconductor exports nearly tripled to $44.82 billion on robust AI-driven demand.
Offshore Yuan Falls on China Growth Concerns
The offshore yuan weakened to around 6.79 per dollar on Monday, reversing gains from the previous session as renewed concerns over China’s economic outlook weighed on sentiment. A private survey showed that the Manufacturing PMI eased to a three-month low of 51.7 from 51.8 in May. The reading followed stronger-than-expected official data showing the Manufacturing PMI rising to 50.3 in June from 50.0 in May, above forecasts of 50.1. Sentiment was also weighed down by an assessment from Goldman Sachs, which noted a more cautious tone among local clients regarding China’s near-term growth outlook, alongside concerns over weak consumer confidence, persistent labor market pressures, and the prolonged property downturn. The yuan’s weakness came even as the PBOC set the daily midpoint at 6.8067 per dollar, its strongest fixing in more than three years. Meanwhile, the EU’s trade chief and China’s commerce minister began talks in Brussels aimed at easing trade tensions.
