Most Asian currencies traded largely unchanged on Friday, as the U.S. dollar softened slightly in thin holiday trading at the start of 2026. Low market participation across the region kept price movements muted.
Currency trading volumes remained subdued after markets in Japan and mainland China stayed closed for the New Year holiday. Several other Asian markets had already shut a day earlier, further reducing liquidity.
With limited participation, foreign exchange markets lacked clear direction, as investors waited for normal trading conditions to return.
The U.S. Dollar Index slipped 0.2%, extending weakness after closing 2025 with steep losses. Expectations of further interest rate cuts from the Federal Reserve, alongside easing inflation pressures, continued to weigh on the greenback.
The dollar struggled to regain momentum heading into the new year, reflecting growing market confidence that U.S. interest rates will move lower as economic growth slows and price pressures ease.
Asian currencies showed minimal reaction in the absence of major regional catalysts.
The Japanese yen weakened slightly, with USD/JPY up 0.1%, while the Singapore dollar traded flat against the greenback. The South Korean won also remained unchanged on the day.
India’s rupee edged modestly higher, with USD/INR down 0.1%.
In China, the onshore USD/CNY pair was little changed, while the offshore USD/CNH slipped 0.1%, indicating mild yuan strength.
The Australian dollar outperformed regional peers, rising 0.4% against the U.S. dollar, bucking the broader trend of subdued Asian FX trading.
