Most Asian currencies traded under pressure on Tuesday as markets remained uncertain about whether tensions in the U.S.-Israel conflict with Iran could ease in the near term. Ongoing geopolitical risks kept investors cautious across regional currency markets.
However, the Chinese yuan stood out as one of the best-performing currencies in Asia. The currency strengthened significantly after China released stronger-than-expected trade data for the first two months of the year.
Comments from U.S. President Donald Trump suggesting that the conflict with Iran could soon come to an end briefly boosted risk appetite in financial markets. Nevertheless, these remarks were counterbalanced after Iran’s Revolutionary Guard dismissed the possibility of a near-term de-escalation.
At the same time, the U.S. dollar remained firm. The dollar index rose by around 0.2% during Asian trading hours, supported by concerns that the conflict could disrupt energy markets and contribute to higher global inflation.
Chinese Yuan Strengthens After Strong Trade Data
The Chinese yuan outperformed most regional currencies, with the USD/CNY pair falling as much as 0.3% and moving back below the 6.9 yuan level. The currency was also supported by a stronger midpoint fixing set by the People’s Bank of China.
Official data showed that China recorded a much larger-than-expected trade surplus during the January–February period. The increase was largely driven by a strong surge in exports.
This data suggests that China’s massive export sector—one of the main drivers of the country’s economic growth—remains resilient after a strong performance in 2025. Analysts believe the sector could continue to support economic expansion in the coming months.
Imports also rose more than expected, partly due to strong domestic consumption during the Lunar New Year holiday. However, it remains uncertain whether this momentum in spending will continue once the holiday period ends.
Japanese Yen Holds Steady as GDP Growth Is Revised Higher
The Japanese yen remained relatively stable, with the USD/JPY pair rising about 0.1%. The currency was still pressured by the strength of the U.S. dollar and concerns about potential energy supply disruptions that could impact Japan’s economy.
Revised economic data showed that Japan’s gross domestic product grew significantly more than initially estimated in the fourth quarter. The stronger growth was supported by higher capital investment and steady consumer spending.
The updated figures highlighted the resilience of Japan’s economy, although exports continued to face challenges. Private consumption growth was also revised upward but remained close to its historical quarterly average of around 0.3%.
Despite this resilience, the Bank of Japan is still expected to move cautiously on interest rate hikes due to ongoing market uncertainty.
Other Asian Currencies Weaken as Iran Conflict Escalates
Across the broader region, most Asian currencies declined as investors remained cautious about the escalating conflict involving Iran.
The Australian dollar weakened, with the AUD/USD pair falling about 0.2%. Meanwhile, the South Korean won experienced significant volatility, with the USD/KRW pair rising around 1.1%.
The Singapore dollar also edged lower, with USD/SGD rising 0.1%, while the Indian rupee weakened slightly as the USD/INR pair climbed another 0.1%, moving further above the 92 rupee level.
President Donald Trump said on Monday that the conflict with Iran could soon reach a conclusion, although he did not provide a clear timeline. He also continued to maintain strong rhetoric toward Tehran.
The situation intensified over the weekend after U.S. and Israeli strikes targeted Iran’s oil infrastructure in Tehran. In response, Iran launched attacks on energy facilities across parts of the Middle East and targeted ships passing through the strategically important Strait of Hormuz.
