Most Asian currencies moved lower on Monday as markets remained cautious following U.S. action against Venezuela, while the Japanese yen weakened despite fresh signals of further interest rate hikes from the Bank of Japan.
The U.S. dollar gained support from increased safe-haven demand after Washington’s move against Venezuela unsettled investors. U.S. President Donald Trump said the United States would take control of Venezuela until a new leader is elected, after authorities detained Venezuelan President Nicolas Maduro.
Dollar strengthens on haven demand
The dollar index and dollar index futures both rose around 0.3% during Asian trading, reflecting higher demand for safety amid rising geopolitical uncertainty.
Over the weekend, reports indicated that Maduro was transported to New York, where he could face legal proceedings. Trump also warned of possible action against other countries opposed to U.S. policy, including Colombia and Iran, and repeated his calls for U.S. control over Greenland.
These developments heightened global geopolitical concerns. Analysts warned that Washington’s actions could create a precedent that may later be followed by other major powers, particularly China and Russia.
Yen weakens despite Bank of Japan rate hike signals
The Japanese yen continued to lose ground, with USD/JPY rising about 0.2% and hovering near levels last seen in early 2025.
The currency’s weakness persisted even after Bank of Japan Governor Kazuo Ueda said the central bank would continue raising interest rates as long as economic growth and inflation align with forecasts.
However, Ueda’s comments largely echoed guidance from the BOJ’s December meeting, when rates were increased by 25 basis points. The yen remained under pressure, with USD/JPY trading near levels that previously prompted government intervention. Traders questioned how much scope Tokyo still has to step into currency markets, given mounting concerns over stretched fiscal spending.
Chinese yuan hits multi-year high on stimulus optimism
The Chinese yuan stood out from the broader regional weakness. The USD/CNY pair fell another 0.2%, reaching its lowest level since May 2023.
The yuan’s strength followed Beijing’s announcement of additional stimulus measures aimed at boosting consumer spending. In late December, the government unveiled a 62.5 billion yuan ($8.94 billion) subsidy program for consumer electronics and other goods.
Supportive action from the People’s Bank of China, including a series of strong daily midpoint fixings, also helped underpin the currency. Private PMI data showed that growth in China’s services sector slowed slightly in December but remained in expansion territory for a third consecutive year.
Broader Asian currencies under pressure
Elsewhere in Asia, currencies weakened as risk appetite faded following the Venezuela developments. The Australian dollar fell nearly 0.2%, while the South Korean won declined, with USD/KRW rising 0.4%.
The Taiwan dollar traded flat, and the Singapore dollar edged 0.2% lower. The Indian rupee also softened, with USD/INR rising 0.1% and moving back above the 90-per-dollar level.
