The Federal Reserve's rate cut in December becomes a "lifeline"! Asian currencies see a respite.

For some emerging market currencies in Asia, investors generally expect that the Fed's rate cut in December may come at just the right time. The Fed's loose monetary policy will help the Reserve Bank of India ease the pressure on the constantly depreciating Indian Rupee, and will also alleviate the weakness of currencies in countries like Indonesia, South Korea, and the Philippines. Data shows that the USD/INR exchange rate broke 90 for the first time this week, and the KRW/USD exchange rate has fallen by over 4% so far this quarter. According to the CME Group's "FedWatch" tool, traders expect a 90% probability of a 25 basis point rate cut by the Fed this month. With Kevin Hassett, the current director of the White House National Economic Council, likely to become the next Fed chairman with a dovish stance, the latest pricing in the interest rate futures market indicates that the Fed's cumulative easing by the end of next year could be between 85 and 100 basis points, equivalent to pricing in four 25 basis point rate cuts. Wee Khoon Chong, Senior Asia-Pacific Market Strategist at a New York bank in Hong Kong, said, "Further easing of monetary policy by the Fed could generally benefit Asian foreign exchange markets." He pointed out that with increasing expectations of a rate cut by the Fed in December, the Asian currency index has rebounded from its November low. Wee Khoon Chong noted that currencies of regions with strong economic growth momentum and sound fiscal policies, such as the Renminbi and the Korean Won, may perform the best. At the same time, he pointed out that the Indian Rupee may continue to be under pressure due to high tariffs from the United States and the risk of economic downturn, while the Philippine Peso will be weighed down by the loose stance of the Philippine central bank. It is worth mentioning that the Renminbi has performed well in recent months. Optimism about improving US-China relations has driven the offshore Renminbi to rise by 0.9% so far this quarter. The prospect of further loosening of monetary policy by the Fed, as well as the possibility of the Renminbi strengthening further, are seen by some analysts as reasons to be bullish on Asian currencies overall. TS Lombard strategists Daniel von Ahlen and Andrea Cicione stated in a report that with the possibility of a bull market in the Renminbi beginning, now is the time to "go long on Asian currencies."