Omicron Threat Noticeably Impacts Asian Currencies

As 2021 entered its final week, today, Monday, December 27, Asian currencies exhibited mixed trading movements during the early morning trading session in Asia. Foreign exchange analysts point to the persistence of the Omicron threat as to be heavily affecting these currencies.

We are in the last week of 2021, and we want to share this foreign exchange-related news with our readers. 

We think this report will help them stay properly informed regarding how the present events, like the Omicron threat and the ongoing coronavirus or COVID-19 pandemic, can affect their foreign exchange activities this week and the Asian currency markets overall.

According to the report published online by international news outlet Reuters, the Thai baht is set to become the worst-performing currency this year in the Asian region. It plunged 0.3 percent to 33.50 baht per US$1. 

Moreover, the dim prospects for tourism in Thailand have badly hurt the Thai baht. This Southeast Asian country’s tourism sector is one significant driver of its economic growth.

This nation reinstated mandatory quarantine for foreign arrivals last week. Additionally, Thailand later canceled some New Year events on discovering its first Omicron cluster.

Meanwhile, the Chinese yuan eased slightly amid China reporting its highest daily surge in local COVID-19 cases in 21 months last weekend. China’s northwestern city of Xian is the country’s new COVID-19 hotspot.

This urban locale entered its fifth day of lockdown. But Xian is yet to report a case of the Omicron variant. 

As for the Singapore dollar, it firmed 0.2 percent to lead gains, followed by two Asian currencies, the Taiwanese dollar and the South Korean won, which are up 0.1 percent each.

These Asian currencies’ latest statuses come as the US dollar or greenback remained little changed. Furthermore, the gains were capped as Japan and China faced prospects of tighter curbs amid the increasing COVID-19 cases. 

On a note, Mizuho foreign exchange analysts pointed out that the resumption of domestic social restrictions cannot be ruled out when analyzing the Asian currencies’ present statuses. 

Their insight comes as the spread of the Omicron variant strain proliferates further, just as many of the Asian nations had tightened or resumed international travel restrictions. We are pleased to learn that most of the Asian currencies commenced this week on a positive note.

We are, indeed, in the final week of 2021. However, we do not think the currency markets are completely unperturbed due to the persistence of the Omicron threat.

The latter has led many countries in Asia to impose stringent measures like lockdowns again lately, similar to what they performed early last year. 

We think that, as we welcome the New Year, the Asian currencies and currency markets worldwide can edge slightly higher. 

Nevertheless, we expect gains to be toned down in the coming days due to external factors such as the Omicron variant strain heavily influencing the foreign exchange realm.

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