By Fabiana Negrin Ochoa and Ronnie Harui
China's central bank reiterated its commitment to a stable yuan, joining the chorus of Asian officials concerned about weakening regional currencies.
The People's Bank of China said it is steadfast in its aim of keeping the yuan steady at a reasonable and balanced level, according to a post on its account on social-media platform WeChat on Thursday.
USD/CNY was last a touch down at 7.2344, USD/CNH was flat at 7.2435.
Asian currencies have been weighed by a flurry of headwinds this year, spearheaded by U.S. dollar strength due to fading expectations for U.S. interest-rate cuts, and various domestic pressures. The widespread depreciation has sparked concerns among officials in various countries.
"High U.S. rates will keep Asian central banks concerned about the effects of potential currency weakness on inflation staying durably within target," Morgan Stanley economists said in a recent report.
In a joint statement released Wednesday, the finance ministers of Japan, South Korea and the U.S. acknowledged "serious concerns" from Tokyo and Seoul over their respective currencies' recent sharp weakness.
The finance ministers said after their first trilateral meeting in Washington, D.C., that they will "continue to consult closely on foreign exchange market developments" in line with existing G-20 commitments.
The statement came as the greenback rose this week to its highest intraday levels against the yen since June 1990 and against the won since November 2022, according to data provider FactSet. The dollar was recently 0.2% lower at 154.10 yen and 0.5% lower at 1,373.46 won.
"Asia awoke to not just a trilateral joint statement but also jawbonings from PBOC," Maybank's forex research team said in a note.
"The central bank wants to prevent the exchange rate from 'overshooting,'" the Maybank team said. The Chinese central bank is also looking to strengthen supervision over financial resources, they added.
"Central banks around the world clearly want their currencies to take a breather from recent declines," Maybank said.
The trilateral statement could serve to limit further weakness in the yen and the won for now, and offer an anchor for other currencies in the Asian region, Maybank added.
The latest developments echo moves by officials in Malaysia and Indonesia.
Indonesia's rupiah tumbled to around four-year lows versus the dollar this week, prompting Bank Indonesia to step in to counter the currency weakness, Maybank analysts said in a recent note. Bank Indonesia is reportedly coordinating with the government and stakeholders like state-owned oil firm Pertamina to uphold currency stability.
In Malaysia, renewed weakness in the ringgit prompted Bank Negara Malaysia to say this week that it will ensure sufficient liquidity and the orderly function of the forex market.
Thailand's baht is also struggling, having tumbled over 7% versus the dollar year to date. That's likely to be causing concern for central bank policymakers, OCBC senior economist Lavanya Venkateswaran said in a note. The delay in rate cuts from the Federal Reserve will push out the timing for Bank of Thailand cuts, as its policy committee closely monitors portfolio outflows and baht depreciation risks, she said.
Heightened market uncertainty in the wake of Iran's attack on Israel could further weigh on Asian currencies.
If there is a sharp escalation in the conflict, that could spur even greater declines in emerging-market currencies, Maybank said.
--Ying Xian Wong contributed to this article
Write to Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com
(END) Dow Jones Newswires
04-18-24 0241ET
