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The South Korean won and Philippine peso experienced the most significant losses among Asian currencies on Thursday as the U.S. dollar remained strong. Federal Reserve Chair Jerome

Powell's hawkish stance and indications of possible future interest rate hikes contributed to the dollar's resilience.

The South Korean won fell 0.8% to reach its lowest level since June 1. Similarly, the Philippine peso, Thailand's baht, and the Singapore dollar weakened by 0.1% to 0.3%.

Thailand's baht has faced considerable pressure this year, depreciating nearly 3% and nearing a seven-month low. The country's uncertain path to selecting a new prime minister continues to impact the currency. However, Citi analysts maintain an overweight recommendation for the baht, citing a strong post-pandemic recovery in tourism and hopes for political clarity in the coming weeks.

Following Powell's statements, the U.S. dollar strengthened. Powell hinted at further rate hikes and did not rule out the possibility of a hike in July. Notably, he also mentioned that inflation is not expected to reach the central bank's 2% target until 2025.

GS Macro Economics Research analysts anticipate a 25-basis point hike by the Fed in July. They believe the central bank is more likely to consider a second hike in November rather than September. Once the Fed concludes its hiking cycle, they expect a period of interest rate stability to allow inflation to return to the target level.

In contrast, most emerging Asian countries have maintained unchanged interest rates as inflation trends downward. The rebound in tourism and economic activity suggests positive prospects for economic growth in these countries.

The Chinese yuan eased by 0.1% despite the country's central bank setting the daily midpoint fixing stronger than expected. Analysts at ING suggest that policymakers may need to cut the required reserve on foreign exchange deposits to convey a stronger message regarding the renminbi depreciation.

Market focus now turns to the upcoming purchasing managers' index (PMI) numbers scheduled for release on Friday. According to a Reuters poll, China's factory activity is expected to contract for the third consecutive month in June, although at a slightly slower pace.

In terms of equities, Thailand experienced its largest intraday rise since June 8, with a 1.4% gain in the SET Index. Manila's stocks added 0.1%, while Seoul's stocks declined by 0.6%. Markets in Indonesia, India, Malaysia, and Singapore were closed in observance of a public holiday. Photo by Braginjohn, Wikimedia commons.