Most Asian currencies moved in a tight range on Tuesday, while the dollar dithered amid heightened uncertainty over global geopolitical tensions and an upcoming Federal Reserve meeting.
The Japanese yen weakened slightly after surging to its strongest level in nearly three months on Monday following a warning on potential intervention from Prime Minister Sanae Takaichi.
The South Korean won was steady even as U.S. President Donald Trump said he will hike tariffs on certain imports from the country to 25%, citing a delay in Seoul’s enactment of a trade deal with Washington.
Yen steadies with intervention in focus The Japanese yen’s USD/JPY pair rose 0.2% to 154.50 yen on Tuesday, after falling sharply in the prior session. The yen was also close to its strongest level in nearly three years.
The yen was aided by heightened speculation over government intervention in currency markets, especially after Prime Minister Takaichi warned against excessive volatility in the currency.
The yen rebounded sharply from recent lows after the Bank of Japan struck a hawkish note during its January meeting. But despite last week’s gains, the currency still remained in sight of levels that have attracted government intervention in the past.
Concerns over stretched fiscal spending under Takaichi had sparked a dire selloff in Japanese government bonds, which in turn pressured the yen.
Asia FX muted, dollar weak as Fed meeting looms Most Asian currencies moved little in anticipation of a Fed interest rate decision on Wednesday.
The central bank is widely expected to leave rates unchanged, amid a slew of mixed cues on the U.S. economy. The Fed is expected to stay on hold until it has more clarity on the world’s largest economy.
Concerns over fiscal policy and the Fed’s independence under Trump also kept markets broadly cautious. This weighed on the dollar and kept Asian currencies trading rangebound.
The dollar index and dollar index futures steadied in Asian trade after logging deep losses last week.
The Chinese yuan’s USD/CNY pair rose slightly but remained close to its strongest levels in 2-½ years.
The Singapore dollar’s USD/SGD pair was flat, while the Australian dollar’s AUD/USD pair also moved sideways.
The Indian rupee’s USD/INR pair steadied after hitting record highs above 91 rupees last week, with an India-Europe trade deal doing little to improve sentiment.
The Taiwan dollar’s TWD/USD pair rose 0.1%.
South Korean won weakens slightly after Trump tariff hike The South Korean won’s USD/KRW pair rose 0.1%, with the won weakening slightly after Trump said he will hike tariffs on South Korean autos, pharmaceuticals, and lumber, to 25%.
Trump criticized Seoul for delaying legislation that enacts a recent trade deal with Washington.
