Asian Currencies Mixed as Dollar Strength Weighs; Yen Rises on Tokyo CPI
Most Asian currencies remained steady on Friday as a stronger U.S. dollar limited movement across regional markets. The Chinese yuan showed little reaction to weak economic data, while the Japanese yen strengthened after hotter-than-expected inflation figures from Tokyo.
Yen Gains After Hot Tokyo CPI and BOJ Comments
The yen firmed slightly, reversing part of its recent losses. Tokyo’s consumer price index for October came in above expectations, suggesting that inflationary pressures remain strong.
Hawkish comments from Bank of Japan Governor Kazuo Ueda also lent support, as he hinted that higher wages could eventually justify a rate hike. The USD/JPY pair fell 0.2%, easing from its nine-month high.
Japan’s latest data showed industrial production grew faster than expected in September, while retail sales slowed. The yen, however, was still the worst-performing major Asian currency in October, pressured by market expectations of more fiscal spending under Prime Minister Sanae Takaichi.
Yuan Holds Steady After Weak Chinese PMI Data
The Chinese yuan traded just above its lowest level in a year on Friday, showing limited response to dismal purchasing managers index (PMI) data.
October’s manufacturing PMI indicated a sharper-than-expected contraction — the seventh straight monthly decline — reflecting ongoing weakness in local business sentiment. The composite PMI also hovered near contraction territory, as sluggish private spending and high U.S. tariffs continued to weigh on activity.
The disappointing data underscored the need for more economic stimulus from Beijing. While Chinese officials have pledged new support measures, concrete plans have not yet been revealed. Despite weak data, the yuan stayed close to its strongest levels of the year thanks to the People’s Bank of China’s consistent support through strong daily fixings.
Trump–Xi Meeting Brings Limited Market Relief
Markets saw only mild optimism after a meeting between Presidents Donald Trump and Xi Jinping, which offered few concrete details.
The talks produced small tariff adjustments but did not ease broader concerns over the ongoing U.S.–China trade tensions. Traders are now watching for Beijing’s follow-through on promises to relax export restrictions and increase purchases of U.S. agricultural goods. The USD/CNY pair slipped 0.1% for October.
Broader Asian FX Trends
Across the region, currencies showed limited movement on Friday but were mostly weaker through October amid global growth concerns and persistent trade friction.
- The Australian dollar (AUD/USD) dropped 0.1%, erasing gains after hot inflation data reduced expectations for Reserve Bank rate cuts.
- The South Korean won (USD/KRW) also fell 0.1%, though it gained earlier in the week after a new U.S.–Korea trade deal lowered tariffs.
- The Singapore dollar (USD/SGD) eased slightly, up 0.8% for the month.
- The Taiwan dollar (USD/TWD) edged higher by 0.1%, while the Indian rupee (USD/INR) hovered above the 88 level, pressured by weaker optimism over a U.S. trade deal.
Meanwhile, the U.S. dollar index and its futures were little changed on Friday but finished October up 1.8%. The greenback strengthened after Federal Reserve Chair Jerome Powell downplayed expectations for a December rate cut, weighing broadly on Asian currencies.
