Asian Currencies Rise Slightly as Fed Minutes Signal Potential Rate Cuts; Yen Nears 8-Month Low
Most Asian currencies moved slightly higher on Thursday after the latest Federal Reserve meeting minutes strengthened expectations for interest rate cuts later this year. Meanwhile, the Japanese yen remained close to an eight-month low as traders reduced bets on further Bank of Japan tightening.
The U.S. Dollar Index slipped 0.2% during Asian trading hours on Thursday, following three straight sessions of gains. Dollar Index Futures also fell 0.2% as of 04:19 GMT.
Fed Rate Cuts Expected After September Meeting Minutes
Minutes from the Fed’s September policy meeting showed that a “substantial majority” of officials see room to lower borrowing costs before the end of the year. However, several policymakers cautioned against aggressive moves, citing ongoing inflation concerns.
Some members preferred to keep rates steady until clearer signs of easing price pressures and a slower job market emerge. Others noted potential downside risks to growth, warning that delaying cuts too long could deepen a future economic slowdown.
A partial U.S. government shutdown has already postponed critical data releases, including September’s employment and inflation reports. The lack of fresh data adds uncertainty ahead of the Fed’s next policy decision, keeping investors cautious.
Regional Currency Performance Remains Mixed
In currency markets, Asian movements were modest. The South Korean won (USD/KRW) slipped 0.2%, and the Singapore dollar (USD/SGD) edged down 0.1%. The Chinese yuan’s offshore pair (USD/CNH) rose 0.3%, while the onshore yuan (USD/CNY) traded flat. The Indian rupee (USD/INR) was steady near record highs seen last month, and the Australian dollar (AUD/USD) gained 0.3%.
Yen Weakens as Takaichi Win Boosts Stimulus Hopes
The Japanese yen (USD/JPY) traded at around 152.5 on Thursday, little changed after five consecutive sessions of losses. The pair briefly touched 152.99 in the previous session — its weakest level since mid-February.
The yen’s weakness followed Sanae Takaichi’s victory in Japan’s ruling Liberal Democratic Party leadership race, which increased expectations for new fiscal stimulus measures. This reduced speculation that the Bank of Japan (BOJ) will tighten policy further this year.
Although the BOJ delivered its first rate hike in 17 years earlier in 2025, policymakers have since adopted a cautious stance, citing fragile economic momentum.
According to MUFG analysts, “The recalibration of market expectations around a slower pace of Bank of Japan rate hikes continues to exert downward pressure on the yen, with spillover effects weighing on regional currencies.”
