Impact of U.S. Federal Reserve Decisions on Asian Markets

The recent sell-off in U.S. markets, marked by a 3% decline in the S&P 500, has significant ramifications for Asian markets, particularly due to the correlation between the strength of the U.S. dollar and Asian currencies. Following the Federal Reserve's indication of fewer expected rate cuts, Asian currencies such as the New Zealand and Australian dollars experienced downward pressure. The Korean won, reaching its weakest level in decades, reflects the broader challenges faced by Asian currencies amidst rising U.S. yields and a stronger dollar. This situation raises critical questions about how Asian central banks will respond, whether through intervention to resist these trends or allowing further currency weakness to occur.