Most Asian currencies traded in a narrow, slightly weaker range on Thursday, while the U.S. dollar eased after the Federal Reserve kept interest rates unchanged and struck an optimistic tone on economic conditions.
Market attention remained firmly on the Japanese yen, amid renewed speculation that authorities in Japan and the United States could coordinate intervention to support the struggling currency.
Risk appetite across Asia stayed fragile, as investors grew cautious over rising fiscal pressures in developed economies. Sentiment was further weighed down by escalating geopolitical tensions, following reports that U.S. President Donald Trump was considering additional measures against Iran.
Dollar weakens after Fed decision
The dollar index and its futures slipped between 0.2% and 0.4% on Thursday, leaving the greenback close to a near four-year low reached earlier this week.
The move followed the Fed’s widely expected decision to hold rates steady at 3.75%. Fed Chair Jerome Powell said the U.S. economy remained solid, with reduced risks on both inflation and employment fronts.
However, Powell faced questions during his press conference about the independence of the central bank. He declined to comment on the issue, which has drawn increased attention after the Trump administration opened a criminal investigation related to a long-running renovation project at the Fed. Powell has previously described the probe as politically motivated.
According to a CNBC report, Powell has yet to comply with certain requests tied to the investigation.
Asia FX subdued, yen remains under scrutiny
Asian currencies largely held within tight ranges on Thursday. The Japanese yen maintained recent gains, supported by ongoing market speculation over fresh intervention measures.
The USD/JPY pair fell about 0.3%, hovering near a three-month low after Japan’s prime minister warned against excessive currency volatility. Reports suggesting that U.S. and Japanese officials were exploring a joint intervention kept traders cautious about betting against the yen.
Elsewhere, the Australian dollar stood out, with the AUD/USD pair rising 0.4% to approach a near three-year high. The currency drew support from stronger-than-expected inflation data, which reinforced expectations that the Reserve Bank of Australia could move toward an interest rate hike.
The Chinese yuan stabilized near its weakest level since May 2023, while the Singapore dollar showed little reaction after the country’s central bank left monetary policy unchanged, in line with expectations.
The Taiwan dollar traded flat, and the Indian rupee edged slightly higher after recently touching a record low above 92 per dollar.
