Asian currencies traded slightly higher on Thursday, showing little reaction to President Donald Trump’s attempt to dismiss Federal Reserve Governor Lisa Cook. Meanwhile, the Indian rupee remained under pressure, hovering near record lows due to the impact of new U.S. secondary tariffs.
The U.S. Dollar Index slipped 0.2% during Asian trading hours, erasing much of its earlier gains, while Dollar Index Futures edged down 0.1% as of 04:02 GMT.
Markets eye Fed outlook; Bank of Korea holds steady
Trump announced earlier this week that he was firing Fed Governor Cook over alleged mortgage irregularities, sparking concerns about the Federal Reserve’s independence. Cook rejected the move, stating Trump lacked the authority, and the dispute is likely headed to court.
Analysts at ING said the event was unlikely to have any immediate impact on forex markets, noting that “the implications may only play out in the longer run,” while near-term focus remains on economic data and the Fed’s rate path.
Traders are currently pricing in an 85% chance of a 25-basis-point rate cut in September, keeping attention fixed on upcoming U.S. data.
Across Asia, currency moves were muted. The Japanese yen slipped 0.2% against the dollar, while the South Korean won gained 0.4% after the Bank of Korea left rates unchanged at 2.50% for a second meeting. The Chinese yuan edged lower onshore (USD/CNY -0.1%) but stayed flat offshore (USD/CNH). The Singapore dollar weakened slightly, while the Australian dollar added 0.2%, extending gains after stronger inflation data complicated the Reserve Bank of Australia’s case for further easing.
Indian rupee pressured by U.S. tariffs
The Indian rupee stayed near record lows, as Washington doubled duties on Indian imports to 50% starting August 27, in retaliation for India’s continued purchases of Russian crude oil.
The rupee’s USD/INR pair held steady on Thursday after four straight sessions of weakness, trading close to the record high of 87.99 per dollar. The currency has faced ongoing pressure since May, falling for four consecutive months and losing ground in eight of the past nine weeks.
