Asian Currencies Rise, Led by Yen and Won After U.S.-Japan Trade Deal
Asian currencies mostly strengthened on Thursday, with the Japanese yen and South Korean won leading the rally after a significant U.S.-Japan trade agreement lifted hopes for similar deals ahead of a looming tariff deadline.
Both the yen and the won climbed to their highest levels in two weeks, each logging gains for the fourth consecutive session.
However, investor sentiment in Japan remained cautious, weighed down by political instability following the ruling coalition’s defeat in last week’s upper house elections and ongoing speculation around Prime Minister Shigeru Ishiba’s possible resignation.
The U.S. Dollar Index dipped 0.1% during Asian trading, marking its fifth straight day of losses.
Yen Gains on Trade Deal Despite Political Jitters
President Donald Trump announced on Wednesday a comprehensive trade agreement with Japan, reducing tariffs on Japanese imports to 15%, down from a previously proposed 25%. In exchange, Japan pledged a $550 billion investment in the U.S. economy.
The yen continued to strengthen, with the USD/JPY pair down 0.4% as of 04:07 GMT.
Still, analysts at ING noted uncertainty surrounding the yen’s outlook, particularly amid reports that Prime Minister Ishiba may resign soon. Although local media had reported his impending resignation, Ishiba later denied making such a decision despite electoral setbacks.
“With political uncertainty high and carry trades still appealing due to low volatility, we don’t see a strong case for further significant yen appreciation,” ING said.
Trade Optimism Lifts Regional Currencies
Elsewhere in the region, the South Korean won saw the USD/KRW pair fall 0.6%, also hitting a two-week low, as investors grew optimistic that additional trade deals could be reached ahead of Trump’s August 1 tariff deadline.
Other Asian currencies also advanced:
- The onshore and offshore Chinese yuan (USD/CNY and USD/CNH) each dipped 0.1%.
- The Singapore dollar (USD/SGD) dropped 0.2%.
- The Malaysian ringgit (USD/MYR) edged slightly lower.
- The Australian dollar (AUD/USD) rose 0.3%.
- The Indian rupee (USD/INR) eased 0.1%.
