Asian Currencies Remain Cautious Ahead of Trump-Xi Summit
Asian currencies traded mostly subdued on Thursday as investors closely monitored a major summit between U.S. President Donald Trump and Chinese President Xi Jinping.
At the same time, ongoing concerns over oil-driven inflation continued to support the U.S. dollar across global currency markets.
The U.S. Dollar Index slipped 0.1% after reaching a two-week high during the previous session, supported by stronger-than-expected U.S. inflation data.
Trump-Xi Talks Focus on Trade and Global Stability
During the opening of the two-day summit, Xi Jinping welcomed progress in trade discussions between China and the United States, saying recent negotiations had produced “positive outcomes.”
Xi also emphasized that cooperation between the world’s two largest economies remains important for global economic stability.
The summit comes as both countries attempt to maintain a fragile trade truce reached last year while continuing discussions on tariffs, artificial intelligence, semiconductor exports, Taiwan, and China’s relationship with Iran.
Chinese Yuan Climbs to Three-Year High
The Chinese yuan strengthened during Thursday trading, with the USD/CNY pair falling 0.1% and reaching its lowest level since February 2023.
Elsewhere in Asia, the Japanese yen remained mostly unchanged against the dollar, while the South Korean won weakened slightly, with USD/KRW rising 0.2%.
The Singapore dollar and Australian dollar also traded relatively flat against the greenback.
Indian Rupee Falls to Record Low
The Indian Rupee remained under pressure, with the USD/INR pair rising 0.2% to a new record high of 95.853 rupees per dollar.
The rupee was negatively affected by rising crude oil prices and continued foreign capital outflows from India.
Analysts said oil prices remaining above $100 per barrel due to the Iran conflict have increased concerns about India’s trade deficit and imported inflation, placing additional pressure on the currency despite likely intervention from the Reserve Bank of India.
Strong U.S. Inflation Supports Dollar
The U.S. dollar remained firm after fresh inflation data strengthened expectations that the Federal Reserve may keep interest rates higher for longer.
New economic data released Wednesday showed U.S. producer prices in April rose at their fastest annual pace since 2022, driven largely by higher energy and transportation costs linked to tensions in the Middle East.
Consumer inflation also increased more than expected, raising concerns that broader inflationary pressures are returning to the U.S. economy.
