Most Asian currencies kept to a tight range on Monday as persistent uncertainty over the U.S.-Israel war on Iran and caution before a Federal Reserve meeting put the dollar near 10-month highs.
The Australian dollar was an outperformer, rising ahead of a Reserve Bank of Australia meeting on Tuesday where the central bank is widely expected to hike rates.
Most other Asian currencies dithered as the Iran conflict showed few signs of easing, keeping oil prices high and fears of energy-fueled inflation largely in play.
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Oil took a brief respite from U.S. President Donald Trump calling on a coalition of countries to help stem supply shocks from the Iran conflict.
Chinese yuan flat after positive industrial prod., retail sales data The Chinese yuan’s USD/CNY pair rose 0.1% after industrial production and retail sales data for the first two month of 2026 read stronger than expected.
The prints showed real manufacturing activity remained robust amid strong export demand, while consumer spending picked up during the Lunar New Year holiday.
Chinese fixed asset investment also unexpectedly grew in the period, returning to growth for the first time since August 2025. The print indicated some increasing confidence among Chinese businesses, especially as spending on artificial intelligence picked up.
But China’s unemployment rate unexpectedly rose in the Jan-Feb period, pointing to continued weakness in some aspects of Asia’s largest economy.
Other Asian currencies moved in a tight range on Monday, with the Japanese yen’s USD/JPY pair falling 0.1%, while the Singapore dollar’s USD/SGD pair was flat.
The Indian rupee’s USD/INR pair rose 0.1% and hit a record high of 92.711 rupees, given that the South Asian country is seen as among the most exposed to energy market disruptions in the Middle East.
The South Korean won’s USD/KRW pair fell 0.3%.
Australian dollar firms ahead of RBA rate hike The Australian dollar’s AUD/USD pair was an outperformer in Asia, rising 0.4%.
The currency was aided chiefly by increasing bets that the RBA will raise rates by 25 basis points to 4.10% at the conclusion of a two-day meeting on Tuesday.
The RBA had last hiked rates in December, and had signaled the potential for more hikes following a late-2025 resurgence in Australian inflation.
RBA officials recently warned that inflationary risks were increasing due to energy disruptions from the Iran war– statements that ramped up confidence in more rate hikes this year.
Dollar near 10-mth high ahead of Fed meeting The dollar index and dollar index futures steadied in Asian trade after racing to a 10-month high on Friday.
The greenback benefited from increased safe haven demand as the Iran conflict showed few signs of stopping, with disruptions in oil markets also driving up fears of energy-driven inflation in the coming months.
The Fed is set to meet later this week and is broadly expected to leave interest rates unchanged amid growing economic uncertainty. Concerns over the Iran war also saw markets largely price out expectations for more rate cuts by the Fed in the coming months.
