The US Dollar surged this week, causing widespread instability across\nAsian currencies. In the final trading session on Friday (18\/09\/2026),\nthe Indonesian Rupiah managed a slight recovery, ending the day at\nRp17,730\/US$. Despite this marginal gain, the Rupiah recorded a weekly\ndepreciation of 0.82%.<\/p>\n
Most Asian currencies suffered losses this week, with the exception\nof the Chinese Yuan. The decline in Asian currencies followed the US\nDollar Index climbing to the 100 level on Wednesday, following the US\nFederal Reserve\u2019s decision to raise interest rates. The South Korean Won\nsaw the sharpest decline, dropping 3.19%, followed by the Japanese Yen,\nwhich fell by 2.11%.<\/p>\n
The Yen\u2019s decline was particularly unexpected given that the Bank of\nJapan (BoJ) raised its policy interest rate to 1.25% on Friday, the\nhighest level since 1995. However, the market perceived the decision as\nless hawkish than anticipated. Concerns that the BoJ might struggle to\nkeep pace with the Federal Reserve\u2019s tightening cycle also pressured the\nYen, as the wide interest rate differential maintains the attractiveness\nof the yen carry trade.<\/p>\n
The Federal Reserve raised its benchmark rate by 25 basis points on\nWednesday (16\/09\/2026), marking its first increase since July 2023. The\nUS central bank also signalled the possibility of further hikes this\nyear due to persistent high inflation and expensive oil prices.\nAdditionally, the Yen faced pressure as Prime Minister Sanae Takaichi\u2019s\nadministration adopted a cautious approach toward monetary\ntightening.<\/p>\n
In contrast, the Chinese Yuan strengthened to CNY 6.69\/US$ during\nFriday\u2019s trading, reaching its strongest level since July 2022. This\nappreciation continues a trend observed since the start of the year,\nwith the Yuan gaining approximately 4.2% against the US Dollar\nthroughout 2026.<\/p>\n
Wang Qing, Chief Macro Analyst at Golden Credit Rating, attributed\nthe Yuan\u2019s strength to two main factors: the retreat of the US Dollar\nIndex following the Fed\u2019s rate hike, and the deliberate direction of the\nYuan\u2019s central parity rate towards a stronger level. China\u2019s solid\nexport growth and relatively stable macroeconomic conditions also\nprovided fundamental support. Wang expects the Yuan to fluctuate between\n6.7 and 6.9 by the end of the year.<\/p>\n
However, Guan Tao, Chief Economist at Huafu Securities, cautioned\nagainst overinterpreting the Yuan\u2019s strength, noting that two-way\nfluctuations are normal. From a domestic fundamental perspective,\nChina\u2019s foreign trade remains stable, with strong export growth and\nsteady macroeconomic development. In the long term, the onshore Yuan has\nappreciated by over 4.1% against the US Dollar since the beginning of\nthe year.<\/p>\n
Regarding the impact of the Fed\u2019s rate hike, Wang noted that China\nhas established a regulatory framework combining macroprudential\npolicies and micro-supervision of cross-border capital flows. He\nsuggested that the risks of significant volatility in capital flows due\nto diverging monetary policy cycles between China and the US can be\neffectively managed.<\/p>\n
Lu Lei, Deputy Governor of the People\u2019s Bank of China (PBOC), stated\nthat China employs a managed floating exchange rate system. China allows\nmarket forces to play a decisive role in exchange rate formation while\npreventing herd behaviour and irrational market expectations. \u201cChina\ndoes not need, nor does it intend, to gain a competitive trade advantage\nthrough currency depreciation,\u201d Lu remarked.<\/p>\n
While Wang predicts the Yuan will maintain a stable to strengthening\ntrend in the short term, he advised markets to monitor China\u2019s export\ndevelopments and the impact of major economies\u2019 monetary policy\nadjustments on the US Dollar Index. Guan Tao added that while positive\nfactors are dominant in the short term, a stronger Yuan could also lead\nto macroeconomic tightening, potentially affecting market sentiment.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/dollar-surge-yen-rupiah-and-won-plummet-while-china-outperforms-us-1789789906", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }