Most Asian currencies remained range‑bound on Tuesday despite rising expectations for a Federal Reserve rate cut next week, while the Indian rupee fell to fresh record lows amid sustained foreign outflow pressures.
The US Dollar Index, which measures the greenback against a basket of major currencies, was largely steady in Asia hours. US Dollar Index Futures also traded flat as of 05:54 GMT.
Global bond yields surge; Fed cut bets in focus The muted regional response comes after global bond yields surged overnight, following hawkish signals from Bank of Japan (BOJ) Governor Kazuo Ueda.
Speaking over the weekend, Ueda suggested the central bank could consider raising rates as early as this month, lifting Japanese Government Bond yields to record highs. The 30‑year JGB yield climbed above 1.9%, marking a multi‑decade peak, while the 10‑year yield neared 1.88%.
The U.S. dollar was largely stable overnight after large swings, as investors balanced the prospect of a Fed rate cut with the broader global tightening in bond markets.
Fed rate-cut expectations have risen meaningfully from last week, after several policymakers sounded more cautious about keeping policy too tight. Money markets now imply close to an 87% chance of a quarter-point cut at the December meeting.
Back in Asia, the Japanese yen’s USD/JPY pair edged up 0.2% after a 0.5% decline overnight.
The South Korean won’s USD/KRW ticked down 0.2%, while the Singapore dollar’s USD/SGD traded flat.
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. The Chinese yuan’s onshore USD/CNY pair was largely flat.
The Australian dollar’s AUD/USD pair also traded unchanged.
Indian rupee hits record low, nears 90 levels The Indian rupee tumbled to an all‑time low of 89.92 per dollar, with the USD/INR pair rising 0.3%.
Analysts attributed the rupee’s weakness to persistent foreign outflows, delays in a potential U.S.-India trade deal, and a widening current account deficit.
The currency is vulnerable despite India’s robust 8.2% GDP growth for the July–September quarter.
"We forecast more INR weakness, and now expect USD/INR to rise modestly above the 90 levels in 2026, targeting 90.80 by the September 2026 quarter," MUFG analysts said in a note.
"RBI is close to the end of the rate cut cycle – We forecast one more repo rate cut, from our previous expectation of two cuts, bringing the repo rate to 5.25%. We think RBI could delay its rate cut to the February 2026 meeting from December, given the recent strong GDP print," they added.
