Emerging market currencies recovered from its session lows on Monday as the dollar dropped somewhat following a robust surge fueled by increasing expectations that the US Federal Reserve would maintain its hawkish stance on interest rates.
The majority of Asian currencies reversed nearly all of their session losses, with the exception of the Taiwan dollar (TWD) and the Indian rupee (INR). With statistics indicating an unexpected uptick in exports in July, the Chinese yuan CNY= edged higher. Reuters says that concerns about a slowing global demand environment have cast a shadow over China’s export projections.
In other markets, the troubled Turkish Lira TRY= lost 0.2% and the South African Rand ZAR= rose 0.5%. Rupee prices increased by around 60 per dollar.
After statistics on Friday revealed robust labor demand in the US, the greenback declined by approximately 0.2% but maintained its high levels. As a result, bets on the Fed raising interest rates by another 75 basis points in September have increased to about 70%. Now the focus is on US inflation statistics that will be released this week. The headline figure appears to have decreased in July.
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