Most Asian currencies moved slightly higher on Friday, supported by growing confidence that the U.S. Federal Reserve will cut interest rates next week. However, the Indian rupee remained close to its record low after the Reserve Bank of India delivered a widely expected rate cut.
The U.S. Dollar Index dipped 0.1% in Asian trading, staying near a one-month low. Dollar Index futures also slipped 0.1% as of 05:57 GMT.
RBI Cuts Rates as Expected; Rupee Holds Near Record Low
The Reserve Bank of India lowered its key repo rate by 25 basis points to 5.25% and kept its policy stance neutral. Policymakers pointed to sharply lower inflation and steady domestic demand as key reasons for easing.
Retail inflation has fallen to near historic lows, giving the RBI room to support borrowing conditions and economic growth.
Still, the decision followed several days of uncertainty. Some traders expected the central bank to pause, given the rupee’s recent decline and India’s stronger-than-expected GDP performance.
The rupee traded steadily around 90 per dollar after touching a record low near 90.50 earlier in the week. The currency has been weighed down by weak foreign inflows and a widening trade deficit.
The USD/INR pair last traded 0.1% higher at 89.875.
Asia FX Edges Up Ahead of Fed Decision
The Japanese yen strengthened as USD/JPY fell 0.3%, driven by renewed expectations of a Bank of Japan rate hike in December. A Reuters report suggested government openness to a move, while recent comments from Governor Kazuo Ueda were viewed as less dovish, reinforcing speculation.
Broader sentiment across Asia improved as traders increased bets on a Fed rate cut. Soft U.S. jobless claims data and signs of cooling inflation have boosted expectations that the central bank may begin easing, supporting risk-sensitive Asian currencies.
Markets are now awaiting U.S. Personal Consumption Expenditures (PCE) inflation data—considered the Federal Reserve’s preferred inflation indicator—which is due later on Friday.
Elsewhere in the region, the South Korean won’s USD/KRW pair slipped 0.3%, while Singapore’s USD/SGD edged 0.1% lower.
China’s onshore yuan was little changed, while the offshore USD/CNH pair dipped 0.1%.
The Australian dollar’s AUD/USD pair rose 0.2%.
