Asian Currencies Face Headwinds Amid Global Economic Turbulence
Published Date: 25th Jul, 2025
July 25, 2025 – Global Markets
Asian currencies are experiencing notable declines as of July 25, 2025, reflecting broader global economic uncertainties. Factors such as U.S. trade policies, Federal Reserve interest rate decisions, and shifting investor sentiments are contributing to the pressure on regional currencies.
Rupee's Record Low Amid Trade Concerns
The Indian rupee has reached a historic low, trading at 87.58 against the U.S. dollar. This depreciation is attributed to persistent portfolio outflows, with approximately $500 million withdrawn from Indian equities in July alone. Additionally, uncertainties surrounding the U.S.-India trade deal, especially with the crucial August 1 deadline approaching, have further strained investor confidence.
Yen's Struggles Amid Political and Economic Pressures
The Japanese yen has become the worst-performing major currency against the U.S. dollar in July, falling by 2%. Contributing factors include concerns over Japan's fiscal policies, potential tax cuts, and cash handouts ahead of the upper house election. These uncertainties have led to increased borrowing costs, with 10-year bond yields reaching levels not seen since the 2008 financial crisis.
Chinese Yuan Faces Challenges Despite Policy Adjustments
The offshore Chinese yuan has weakened by 0.2%, reflecting broader regional trends. Despite China's efforts to stabilize the currency, including policy adjustments, the yuan remains under pressure due to global economic factors and trade tensions.
Regional Outlook and Central Bank Responses
Central banks across Asia are closely monitoring currency movements and economic indicators. In India, the Reserve Bank of India is expected to maintain current interest rates in August but anticipates a rate cut by year-end due to falling inflation. Similarly, Japan's central bank faces challenges in balancing fiscal stimulus with currency stability amid political uncertainties.
The decline in Asian currencies underscores the interconnectedness of global economies and the impact of geopolitical and economic developments. Investors and policymakers alike will need to navigate these challenges carefully to maintain economic stability in the region.
Date: 25th Jul, 2025
