Investing.com– Most Asian currencies fell on Tuesday and headed for annual losses as the dollar held firm heading into 2025, while the Chinese yuan weakened after data showed the country’s factory activity which expands at a slower rate.

It was 0.1% weaker in Asian trade but remained near the 2-year high touched earlier in the month. Also ticked below.

Asian currencies have weakened sharply this year as the Federal Reserve’s interest rate outlook, and fears about a potential US-China trade war under Donald Trump’s administration, dampened sentiment. at risk.

The Fed’s recent signal of smaller cuts in 2025 has given renewed strength to the dollar and created downward pressure on Asian currencies.

China’s yuan fell as factory activity expanded at a slower-than-expected pace

The onshore pair of the Chinese yuan rose 0.2% on Tuesday, while the offshore pair was largely unchanged.

China’s expanded for a third straight month in December as a raft of new stimulus measures continued to provide support, purchasing managers’ index data showed on Tuesday. However, the increase was slightly lower than market expectations and below last month’s reading.

Markets are clamoring for more clarity on Beijing’s plans for stimulus measures in the coming year. Recent reports suggest that the country will increase fiscal spending to support economic growth.

Asian currencies are set for annual decline

The Japanese yen pair fell 0.3% on Tuesday after it hit a five-month high in the previous session. The yen is set to lose more than 10% against the US dollar for the year.

The Singapore dollar pair was largely unchanged but headed for a yearly rise.

The Australian dollar was slightly lower on Tuesday.

The Indian rupee pair rose 0.1%, and is on track to rise more than 3% this year. The rupee has hit new record lows against the US dollar this month.

The Thai baht pair rose 0.3%, while the Indonesian rupiah pair gained 0.2% on Tuesday.

South Korea’s gains come amid deepening political unrest

The South Korean won pair rose 0.1% on Tuesday. The won weakened by almost 6% against the US Dollar in December, which saw a failed imposition of martial law in the country.

The winner is the worst-performing currency among its Asian peers, tracking a more than 12% decline in 2024.

In the latest updates, a South Korean court approved an arrest warrant on Tuesday for President Yoon Suk Yeol, who was impeached and suspended from office following his decision on December 3 to impose martial law.

The Corruption Investigation Office for High-ranking Officials (CIO) said the Seoul Western District Court granted the warrant requested by investigators looking into Yoon’s brief imposition of martial law.