Chinese yuan sinks on mixed GDP, Asia FX rattled by recession fears By Investing.com

By Ambar Warrick

Investing.com — Most Asian currencies fell on Tuesday amid renewed fears of a global recession this year, with the yuan among the worst performers as data showed Chinese economic growth was pummeled by COVID lockdowns in 2022.

The fell 0.4% to 6.7611, coming off a near five-month high after data showed that the Chinese economy grew at a than the prior year. The trend was driven largely by on-and-off anti-COVID lockdowns.

But the economy during the fourth quarter, with and data for December also beating expectations as the country began pivoting away from its strict zero-COVID policy.

While the relaxing of anti-COVID measures is expected to eventually spur a Chinese economic recovery this year, the mixed GDP data and surging COVID-19 cases have cast doubts over the timing of such a recovery.

Broader Asian currencies retreated as fears of a global recession were heightened by a that showed that two-thirds of the economists polled expected a recession this year. A separate survey of business heads by PricewaterhouseCoopers also posited a glum outlook for the economy this year.

The was the worst performer in Asia, losing 0.7%, while the and lost 0.3% and 0.4%, respectively. The rupee was also hit by data showing India logged weaker-than-expected in December, as well as a widening .

The and recovered slightly from a seven-month low, catching some safe haven bids.

A global recession bodes poorly for Asian currencies, given that they usually benefit from a risk-on environment that ensures steady capital flows to the region. Headwinds in major economies could also spill over into Asia, further denting local growth and currencies.

The fell 0.2%, but hovered just below a seven-month low as markets positioned for more hawkish cues from the later this week.

The central bank is widely expected to keep interest rates unchanged at record lows on Wednesday. But any potential changes to its yield curve control are in focus after the bank unexpectedly altered the mechanism in December.

The fell 0.1% after data showed that the country’s key shrank much more than expected in December, highlighting more near-term headwinds for the Asian financial hub.