The Federal Reserve’s hawkish tone, despite its recent rate cut, has triggered a selloff in Asian currencies. The Bloomberg Asia Dollar Index slid 0.4% on Thursday, highlighting the dollar’s broad strength. The Federal Reserve’s decision to cut rates, paired with its renewed focus on inflation, has shifted market dynamics. Chair Jerome Powell acknowledged that their year-end inflation projections have faltered, suggesting tighter monetary conditions ahead. Bank Indonesia has openly intervened in domestic markets, signaling a strong stance to traders.The Reserve Bank of India has used both offshore and onshore mechanisms to stabilize the rupee but has refrained from public commentary. Also, many expect the yuan to face further challenges in 2025, especially amid the looming possibility of another US-China trade war. The region’s currencies have collectively shed nearly 4% against the dollar this year, even as the Fed shifted to rate reductions.