Most Asian currencies traded in a narrow and mostly weaker range on Friday as investors sharply reduced expectations that the Federal Reserve will cut interest rates in December.
Despite this shift, the U.S. dollar found little support, as lingering uncertainty over the economic fallout from the longest U.S. government shutdown in history — which ended on Wednesday — weighed on sentiment.
China’s latest economic data also pressured regional markets. The yuan remained flat as the world’s second-largest economy entered the fourth quarter on a subdued note.
The South Korean won was a notable outperformer, rebounding strongly from near 16-year lows after the government announced plans to stabilize the rapidly weakening currency.
Rate-Cut Bets Fade, Dollar Struggles for Momentum
Expectations for a December Fed rate cut were scaled back significantly this week amid concerns about the unresolved impact of the lengthy U.S. government shutdown.
Uncertainty intensified on Thursday after White House officials indicated that October inflation and employment data may not be released because of the shutdown. With fewer data points available, the Federal Reserve could enter its December meeting without clear economic guidance, increasing the likelihood that interest rates will remain unchanged.
The dollar weakened on Thursday and continued to edge lower on Friday. Both the dollar index and dollar index futures hovered around the low-99 level, leaving the currency down roughly 0.4% for the week.
South Korean Won Strengthens on Government Support
The South Korean won strengthened sharply, with USD/KRW falling 0.8% on Friday, after reports that the government planned intervention to stabilize the currency.
Bloomberg reported that Seoul was coordinating with major financial institutions, including the Bank of Korea and the national pension fund, to support the won as it faced heavy selling pressure from equity outflows and rising regional uncertainty.
The pair had approached its highest level in nearly 16 years on Thursday before reversing.
Chinese Yuan Steady After Weak Economic Data
The Chinese yuan traded around 7.0949 per dollar, showing little reaction to a series of soft October data releases.
Industrial production grew at a slower pace than expected, while fixed asset investment fell more sharply, suggesting businesses remain cautious about new spending. Retail sales were the only positive surprise, rising slightly above forecasts but still slowing from September.
The data underscored persistent weakness in China’s economy, which continues to struggle with high U.S. tariffs and widespread disinflation. Chinese authorities have pledged additional stimulus to support growth.
Broader Asian Currency Moves
The Japanese yen slipped slightly, with USD/JPY moving lower after dropping from the 155 level on Thursday — a threshold previously tied to government intervention.
The Australian dollar continued to outperform, rising 0.2% as strong labor market data reduced expectations for further cuts by the Reserve Bank of Australia.
The Singapore dollar edged lower, while the Indian rupee slipped 0.1% amid signs of intervention from the Reserve Bank of India. The Taiwan dollar was mostly unchanged.
