Investing.com – Most Asian currencies were steady on Monday after an unexpected interest rate cut in China provided some cheer, while the dollar fell after President Joe Biden said he would not seek re-election.
Biden has endorsed Vice President Kamala Harris, who is now likely to face Republican front-runner Donald Trump in the presidential race.
Biden’s move has heightened uncertainty over the upcoming presidential election, which in turn has soured sentiment towards risk-based markets. This, coupled with concerns that a potential Trump presidency could also entail more clashes with China, has weighed on regional currencies.
Dollar falls after Biden news, focus on rate cuts
Gold and silver prices fell 0.1% each in Asian trading, amid uncertainty over the political outlook in the United States.
CBS polls last week showed Trump leading Biden and Harris in the polls. Analysts expect a Trump presidency to lead to higher inflation, especially if he imposes tougher trade restrictions and higher import tariffs on China.
But Harris is now expected to pose a greater challenge to Trump, especially since reports have shown that all of the state’s Democratic Party chairs have endorsed Harris. Democratic donations have also surpassed $50 million after Biden’s endorsement of Harris.
The dollar rose last week amid speculation about the 2024 election. But the dollar’s gains were largely capped by rising bets that the Federal Reserve will start cutting interest rates from September.
This idea weighed on the dollar in early July, and provided some relief to Asian markets.
China’s yuan nears eight-month low after surprise lending rate cut
The Chinese yuan was lower on Monday, with the pair up 0.1% to 7.2729, approaching levels last seen in November.
The yuan’s weakness came after the People’s Bank of China unexpectedly cut its benchmark interest rate to further ease monetary policy and support the economy.
The rate cut comes as China faces a slowdown in economic recovery, adding to mounting pressure on the yuan.
The recent weakness in the yuan also came amid concerns about Trump’s presidency, as Trump has maintained a negative rhetoric toward Beijing.
Broader Asian currencies moved in a flat-to-lower range, weighed down by uncertainty over U.S. policy. The Japanese yen was steady at 157.44 yen, after seeing sharp swings last week amid suspected government interference.
The Australian dollar pair fell by 0.2%, while the Singapore dollar pair remained stable.
The South Korean won rose slightly, while the Indian rupee fell 0.1% after rising to record highs last week.