Most Asian currencies fell to one-month lows as the dollar strengthened after US CPI data.

Reuters reports Most Asian currencies sank to their lowest levels in more than a month on Wednesday, as the dollar strengthened following consistently strong US inflation data fueled expectations of more Fed rate rises.

While the monthly decrease in the headline consumer price index was expected, the annual rate of 6.4% was higher than expected.

The Malaysian ringgit plummeted 0.8% to its lowest level since January 9, while the Thai baht slid 0.7% to its lowest level since January 12. The Indian rupee fell 0.2% to its lowest level in over a month.

Fed policymakers indicated on Tuesday that the US central bank will need to gradually raise interest rates in order to stay up with inflation.

Money markets have completely priced in a 25 basis point (bp) Fed rate rise in March, and another one is nearly probable in May.

“The Fed made a mistake by slowing to 25-bp increases too soon. We predicted that this would only prolong the present tightening cycle.

“It’s now a case of death by a thousand cuts, rather than the old scenario of being struck by a freight train and then having to get back up,” Clifford Bennett, chief economist at ACY Securities, wrote in a note.

“The protracted constancy of Fed rate rises will wear on consumer, corporate and investor nerves equally. Further consumer and corporate investment cuts are almost expected.”

Regional equities also declined. South Korean equities plummeted 1.6% to lead the decline, while Taiwanese stocks declined 1.4%.

The strong dollar is putting pressure on Asian currencies as investors focus on the Fed’s rate outlook.

Singapore’s finance minister, Lawrence Wong, announced on Tuesday that the city-2023 state’s budget will include a minor deficit of 0.1% of GDP, intended to helping people handle the demands of growing living expenses and rebuilding the city-pandemic-depleted state’s coffers.

This year, Singapore’s trade-dependent economy will confront headwinds from slowing global growth, inflation, and increasing interest rates.

Meanwhile, its expenditures are rising because to the rising cost of healthcare, which is being pushed by an ageing population.

“Budget 2023 has found the correct balance in addressing urgent consumer needs despite growing expenses while also assisting firms in raising productivity and overall competitiveness,” DBS analysts said in a client note.

“Tighter monetary conditions, rising inflation, and geopolitical tensions have weighed heavily on global demand, hurting on Singapore’s development prospects.”

Singapore’s currency dropped 0.4%, while shares plummeted 1.2% to their lowest level in in a month.