Most Asian currencies were largely muted on Thursday amid persistent uncertainty over U.S. trade policy, while the Chinese yuan and Japanese yen outperformed on domestic catalysts.
The US Dollar Index ticked down 0.1% during Asian hours. US Dollar Index Futures also traded 0.1% lower as of 00:22 ET (05:22 GMT).
Get premium forex market insights with analyst comments on InvestingPro Chinese yuan hits 34-mth high amid policy support bets The Chinese yuan's onshore pair USD/CNY dropped 0.5% to a fresh 34-month low of 6.834 yuan amid expectations of policy support ahead of China’s annual parliamentary gathering, the National People's Congress.
The offshore pair also weakened, with USD/CNH hitting its lowest since mid-April 2023.
Investors are positioning for growth targets and potential fiscal stimulus signals at the meeting, which is widely seen as setting the tone for Beijing’s economic priorities this year.
Broader regional currencies remained subdued as U.S. trade tariff jitters lingered. President Donald Trump’s 10% global tariffs took effect earlier this week, with the administration working to hike rates to 15%.
The South Korean won's USD/KRW pair was largely muted after the Bank of Korea left interest rates steady at 2.5%, as expected, earlier in the day.
The Singapore dollar's USD/SGD pair edged down 0.1%, while the Indian rupee's USD/INR gained 0.1%.
The Australian dollar's AUD/USD pair rose 0.2%.
BOJ expected to hike rates despite govt pressure The Japanese yen's USD/JPY pair fell 0.4% after Bank of Japan Governor Kazuo Ueda said in an interview with the Yomiuri Shimbun that policymakers would closely scrutinize incoming data at their March and April meetings, leaving open the possibility of another rate hike if inflation and wage trends remain firm.
The remarks reinforced expectations that Japan could continue its gradual normalization path.
The yen had weakened on Wednesday after media reports said Prime Minister Sanae Takaichi struck a cautious tone on further rate increases and following the nomination of two dovish-leaning candidates to the BOJ board.
"With the appointment of two new members, a broader range of perspectives will be brought to monetary policy discussions, but no single view is expected to dominate decisions," ING analysts said in a note.
"We continue to believe it is more probable that a rate hike will occur in June rather than in April, following confirmation of the Spring Wage Negotiations securing above 5% growth and April inflation data," they added.
