Asian currencies traded in mixed territory on Monday, November 2, as the Chinese yuan remained close to its strongest level in more than four years. Meanwhile, the US dollar held relatively steady as investors awaited the US midterm elections and several major economic announcements.
Currency markets showed limited directional momentum ahead of a busy week featuring central bank interest rate decisions, US employment figures, and political developments in Washington.
The US Dollar Index traded around 101.88, reflecting cautious sentiment across global foreign exchange markets.
Chinese Yuan Holds Near Four-Year High Against US Dollar
The Chinese yuan remained one of the stronger performers among Asian currencies, supported by sustained demand from exporters converting their foreign-currency earnings into yuan.
The offshore USD/CNH exchange rate traded near 6.6523, while the onshore USD/CNY pair stood around 6.6540.
During Friday’s session, the onshore yuan strengthened to approximately 6.659 per dollar, reaching its strongest level since June 2022.
China’s currency has appreciated roughly 5% against the US dollar in 2026, reflecting an extended period of strength.
Continued foreign-exchange conversions by Chinese exporters have helped support the yuan, even as uncertainty surrounding global economic conditions persists.
The People’s Bank of China also set Friday’s daily yuan midpoint at 6.7138 per dollar, its strongest official fixing since February 2023.
However, the fixing remained considerably weaker than market expectations, highlighting the central bank’s cautious approach to managing currency movements.
US Dollar Steadies Ahead of Midterm Elections
The US dollar remained broadly stable as investors prepared for Tuesday’s midterm elections, which could significantly influence the political balance in Congress.
The elections will determine whether Democrats can gain control of the House of Representatives and potentially challenge Republican dominance in Washington.
Current expectations suggest Democrats have a strong chance of winning the House, although the Senate outcome remains less predictable.
A Democratic victory in both chambers could complicate President Donald Trump’s legislative agenda, particularly regarding government spending and economic policy.
Analysts also warned that changes in congressional control could create obstacles for data center development and artificial intelligence infrastructure investment.
Future negotiations over the US federal debt ceiling could become another source of political and financial uncertainty.
Beyond the elections, investors are awaiting October’s US employment report, scheduled for Friday.
The labor market figures could influence expectations for the Federal Reserve’s next interest rate decision and provide fresh direction for the dollar.
Euro and British Pound Trade Cautiously
Major European currencies showed relatively modest movements against the US dollar during Monday’s trading session.
The EUR/USD exchange rate advanced approximately 0.2% to 1.1179 after briefly falling to 1.1149 earlier in the day.
Despite the recovery, the euro remained under pressure following Fitch Ratings’ decision to revise France’s credit outlook from stable to negative.
The ratings agency cited deteriorating debt dynamics, raising concerns about France’s fiscal position and the broader European economic outlook.
Meanwhile, the British pound edged higher, with GBP/USD gaining around 0.04% to 1.3394.
Sterling had traded near 1.3387 earlier in the session, reflecting limited volatility ahead of upcoming central bank announcements.
Investors will continue monitoring European economic developments and monetary policy expectations for further currency market signals.
Japanese Yen Weakens as BOJ Holds Interest Rates
The Japanese yen weakened modestly against the US dollar, with USD/JPY rising approximately 0.2% to 157.88.
The movement followed the Bank of Japan’s decision last week to maintain its benchmark interest rate at 1.25%.
The central bank voted 8-1 in favor of keeping borrowing costs unchanged, despite continued discussions about further monetary tightening.
The Federal Reserve, European Central Bank, Reserve Bank of New Zealand, and Bank of Thailand also left interest rates unchanged during their latest policy meetings.
These decisions have shifted investor attention toward upcoming economic releases and the possibility of further changes in global interest rate expectations.
Australian Dollar Slips Ahead of RBA Rate Decision
The Australian dollar weakened slightly as investors prepared for Tuesday’s monetary policy announcement from the Reserve Bank of Australia.
The AUD/USD pair declined approximately 0.1% to 0.7024.
Markets widely expect the Australian central bank to increase its benchmark cash rate to 4.85%, potentially reaching its highest level in nearly two decades.
A rate increase could provide support for the Australian dollar, although the currency’s reaction will also depend on the central bank’s guidance regarding future monetary policy.
Meanwhile, the New Zealand dollar remained under pressure following an unexpected decision by the Reserve Bank of New Zealand to maintain interest rates.
The NZD/USD pair fell approximately 0.3% to 0.5614, extending weakness from the previous week.
The New Zealand dollar had already declined around 1.2% after the central bank unexpectedly held its policy rate at 2.75%.
Further monetary policy decisions are expected this week from the Bank of England and central banks in Norway and Sweden.
In Asia, Bank Negara Malaysia is expected to maintain its benchmark interest rate at 2.75% on Thursday.
South Korean Won Falls Amid Foreign Investment Uncertainty
The South Korean won experienced a relatively sharp decline during Monday’s Asian trading session.
The USD/KRW exchange rate climbed approximately 0.7% to 1,342.83, indicating a weaker Korean currency against the US dollar.
The move occurred amid uncertainty surrounding foreign investment flows and the sustainability of South Korea’s recent equity market gains.
Technology companies, particularly semiconductor manufacturers and businesses linked to artificial intelligence, have played a major role in supporting the country’s stock market.
However, fluctuations in foreign investor demand and broader market volatility continue to influence the won’s performance.
South Korea’s export sector remains an important source of economic support, benefiting from strong international demand for advanced semiconductors and AI-related technologies.
China Manufacturing Data Provides Support for Yuan
Fresh Chinese manufacturing figures offered some encouragement for the yuan despite conflicting signals from the country’s industrial sector.
The RatingDog private-sector manufacturing survey showed continued expansion in October, with factory production increasing at a faster pace.
The stronger private-sector performance contrasted with China’s official manufacturing PMI, which returned to contraction territory.
The difference suggests that smaller and privately owned manufacturers experienced more favorable business conditions than some larger industrial companies.
Improving production and demand conditions could provide additional support for China’s currency if the positive momentum continues.
However, investors remain cautious about the broader outlook for Chinese economic growth and international trade.
Southeast Asian Currencies Face Mixed Trading Conditions
Several Southeast Asian currencies weakened against the US dollar as investors evaluated regional economic developments.
The USD/IDR exchange rate increased approximately 0.4% to 18,171, indicating depreciation in the Indonesian rupiah.
Meanwhile, USD/SGD advanced 0.2% to 1.2795, while USD/MYR gained 0.3% to 4.0665.
The movements reflected uneven performance across Asian foreign exchange markets.
Investors are also awaiting inflation reports from Taiwan, Thailand, and the Philippines, which could provide further insight into regional price pressures and monetary policy expectations.
Economic growth figures from Indonesia will be another important development.
DBS expects Indonesia’s third-quarter economic growth to moderate slightly to 5.2% from 5.3% in the previous period.
The figures could influence expectations for regional central bank policies and investor appetite for emerging Asian currencies.
Asian Currency Outlook Hinges on Elections and Interest Rates
Asian currencies face a potentially volatile week as investors assess US political developments, central bank decisions, and incoming economic data.
The Chinese yuan remains a notable source of strength, trading near multi-year highs against the dollar.
However, other regional currencies, including the Japanese yen, South Korean won, and Indonesian rupiah, continue to face varying degrees of pressure.
The upcoming US midterm elections could influence expectations for fiscal policy, government borrowing, and broader financial market conditions.
At the same time, monetary policy announcements from major central banks may reshape interest rate expectations and international capital flows.
For now, currency traders are likely to remain focused on political uncertainty, inflation developments, and economic growth indicators as they assess the next direction of Asian foreign exchange markets.
