The U.S. dollar strengthened against most Asian currencies on Wednesday. Renewed geopolitical tensions in the Middle East boosted demand for safe-haven assets.
Investors also remained cautious ahead of the Federal Reserve’s June meeting minutes, which could offer more clues about the future path of U.S. interest rates.
Dollar Supported by Middle East Tensions
The greenback stayed firm after Washington launched fresh strikes on Iran and tightened sanctions on Iranian oil exports.
The move followed recent attacks on commercial shipping in the Strait of Hormuz. These developments kept oil prices elevated and brought inflation concerns back into focus.
The U.S. Dollar Index held near a one-week high around 101. Meanwhile, the dollar remained close to a four-decade peak against the Japanese yen.
Risk Appetite Weakens Across Asia
A technology-led selloff on Wall Street also weighed on Asian market sentiment.
Weakness in South Korea’s semiconductor sector spread into broader regional markets. This added further support to the U.S. dollar as investors moved away from riskier assets.
Central Bank Outlooks Drive Asian Currencies
Different central bank policies continued to shape foreign exchange markets across Asia.
The Reserve Bank of New Zealand raised interest rates by 25 basis points to 2.50%, as widely expected. The central bank also signaled that more tightening may be needed to bring inflation back to target.
The decision helped the New Zealand dollar outperform other regional currencies. The U.S. dollar fell around 0.6% against the kiwi.
Australian Dollar Edges Higher
The Australian dollar also gained modestly.
The U.S. dollar slipped around 0.2% against the Australian dollar, with the pair trading near 0.6941.
Yen Remains Under Pressure
The Japanese yen stayed weak, with USD/JPY hovering near 162.20.
That level remains close to areas that have previously triggered official intervention from Japanese authorities.
Bank of Japan board member Toichiro Asada said clearer signs of demand-driven inflation are needed before supporting further interest rate hikes. His comments reinforced expectations that Japan will normalize monetary policy only gradually.
Malaysian Ringgit Steady Before Rate Decision
The Malaysian ringgit was little changed ahead of Thursday’s Bank Negara Malaysia policy decision.
Markets broadly expect the central bank to keep interest rates unchanged.
OCBC expects Bank Negara Malaysia to leave its overnight policy rate at 2.75%. Recent measures to encourage the repatriation and conversion of overseas earnings may also help stabilize the ringgit if broader dollar strength eases.
South Korean Won Weakens
The South Korean won remained one of the weakest currencies in the region.
USD/KRW rose around 0.7% to trade near 1,503. The move came as selling pressure returned to semiconductor stocks.
Samsung Electronics and SK Hynix extended losses after a post-earnings selloff raised fresh concerns about chip sector valuations.
Taiwan Dollar Softens
The Taiwan dollar also weakened against the greenback.
USD/TWD rose around 0.3% to near 32.04. This happened even as Taiwan’s equity benchmark performed better than many regional peers.
The move showed that demand for the U.S. dollar remained strong across Asian currency markets.
China Yuan Holds Steady
The offshore yuan edged slightly stronger, with USD/CNH moving lower to around 6.80.
The onshore yuan was little changed after the People’s Bank of China maintained firm daily fixings.
Elsewhere, USD/INR climbed around 0.3%, while USD/THB and USD/HKD were little changed.
Fed Minutes and China Inflation Data in Focus
Investors are now waiting for the Federal Reserve’s June meeting minutes later on Wednesday.
Markets will also watch China’s June inflation report and Bank Negara Malaysia’s rate decision on Thursday.
These events could provide fresh direction for U.S. monetary policy expectations and Asian currency markets.
