Investing.com – Most Asian currencies fell on Wednesday. The Japanese yen hit its lowest level since 1990 as the dollar strengthened ahead of new inflation and Federal Reserve signals later this week.
Trading volumes also decreased slightly ahead of the Good Friday holiday.
USDJPY hits 1990 high as BOJ dovish talk and intervention take center stage
The yen weakened on Wednesday, with the pair rising 0.2% to 151.97, its highest level since mid-1990.
The yen’s weakness was initially sparked by comments from Bank of Japan board member Naoki Tamura, who said the central bank would have to move slowly and steadily toward normalizing its ultra-loose policy in the coming months. His comments reinforced the view that the Bank of Japan will remain broadly accommodative in the short term, providing little support for the yen.
But further losses for the yen were limited by the prospect of government intervention in foreign exchange markets. Those concerns have been heightened since Japan’s top currency diplomats warned that they would not rule out any measures to stop the yen’s fall.
Finance Minister Shunichi Suzuki said on Wednesday he would take “decisive steps” against excessive currency movements, repeating comments from 2022 when the government carried out a record high level of intervention to support the yen.
Chinese Yuan is fragile, USDCNY rises above 7.2
Among other Asian currencies, the Chinese yuan remained weak, with the pair rising above the 7.2 level as sentiment towards the country remained largely gloomy.
The yuan’s weakness came despite a series of stronger averages from the People’s Bank of China, while recent reports also showed that the PBOC had instructed large state-owned banks to sell dollars and buy yuan.
Sentiment towards Chinese markets remained largely negative, weighing on the yuan as traders saw little improvement in the economy in 2024. In the first two months of the year, growth was 10.2%, but most of the growth was due to a weak base for comparison. from 2023.
Dollar strengthens near 1-month high ahead of PCE data and Fed speeches
Yi rose 0.1% in Asian trade, extending gains overnight and remaining within recent monthly peaks.
Traders remained biased toward the dollar following dovish signals from other major central banks, while anticipation of data, the Fed’s preferred inflation gauge, and several key Fed speakers this week also lifted demand for the dollar.
The strengthening dollar put pressure on most Asian currencies. The South Korean won weakened, with the pair up 0.3% and the Singapore dollar up 0.1%.
The Indian rupee hovered near the record low hit last week, with the pair remaining well above the 83 level.
The Australian dollar weakened, with the pair falling nearly 0.2% after data remained muted in February, lending more credence to the Reserve Bank of Australia’s dovish outlook.