On Tuesday Asian currencies showed mixed dynamics: the US dollar remained near recent highs, the yen weakened, and the Indonesian rupiah approached historical lows.
On Tuesday Asian currencies traded in different directions. The US dollar held near recent highs in anticipation of the Federal Reserve's decision, which is due to be announced later in the week. The Japanese yen partially recouped the gains of the previous week, when investors sought safe-haven assets amid concerns about the revaluation of shares in companies related to artificial intelligence.
The USD/JPY pair rose 0.13% and reached 157.70. According to the latest data, the yen weakened 0.2% to 157.73 per dollar. The Bank of Japan is expected to keep the key rate at 1.25% following the meeting ending on Friday, but may signal the possibility of further rate hikes.
The Indonesian rupiah remained under pressure near historical lows. The USD/IDR pair rose 0.19% to 18 129.1 and 0.2% to the same level. Since the beginning of the year the rupiah has lost about 8% against the dollar. Pressure intensified due to foreign capital outflows, high global bond yields, rising oil prices and concerns about a possible reclassification of Indonesia in MSCI indices.
Bank Indonesia last week kept the key rate at 5.75%, preferring currency interventions and measures to stimulate hedging. The regulator also raised the deposit facility rate from 4.75% to 5.00%.
The Chinese yuan remained stable: USD/CNH held around 6.6678, while USD/CNY fell 0.03% to 6.6683. The South Korean won strengthened slightly, with USD/KRW down 0.1% to 1 324.36. The Australian dollar rose 0.1% to 0.7025, the New Zealand dollar 0.3% to 0.5695. USD/INR rose 0.2% to 95.353, USD/SGD added 0.04% to 1.2809.
Currency markets remain focused on central bank decisions this week, including the Fed and the Bank of Japan, which may influence the dynamics of the dollar and the yen.