Asian currencies and stocks fall on hotter US inflation

The move matters because higher US rates tend to lift Treasury yields and the dollar, pulling capital toward dollar assets and away from emerging markets. That raises borrowing costs for companies and governments that rely on dollar funding and can tighten financial conditions across Asia just as growth in the region is slowing.

The selloff was most acute in semiconductors and technology, where investors are already questioning the durability of AI-driven spending. South Korea’s KOSPI slumped 7.6% to its lowest since early April after briefly dropping more than 9% and triggering a circuit breaker for the first time in two-and-a-half months, while Taiwan’s benchmark fell 3.4%. TSMC slid 2% to its lowest close since late September.

Japan’s Nikkei also tumbled nearly 5% as AI names sold off on concerns about CoreWeave debt, adding to the regional risk-off tone. In currency markets, the Philippine peso touched a record low of 63.09 per dollar and the Indonesian rupiah weakened to 17,957 before recovering some ground.

The inflation shock came after US consumer prices rose more than expected in the latest reading, sharpening expectations of another Fed move, possibly as soon as this month. Reuters reported that the data also rattled Wall Street technology stocks overnight, as investors reassessed how higher financing costs could affect AI infrastructure spending by Oracle, CoreWeave and peers.

For investors, the immediate risk is that a stronger dollar and rising US yields extend the pressure on Asian FX, especially in markets with heavy import bills, dollar debt or large technology exposure. Indonesia’s central bank is already intervening to support the rupiah, while Singapore shares fell about 1% to a three-month low on weakness in DBS Group and Oversea-Chinese Banking Corp.

The next catalyst is US policy expectations, with traders now watching whether the Fed confirms another hike and whether Asia’s central banks lean further into defense of their currencies. Until then, the combination of hotter inflation, firmer Treasury yields and fragile AI valuations leaves regional assets exposed to more volatility.