Asia FX muted as Fed fears persist, yen rises amid intervention watch
Investing.com-- Most Asian currencies moved little on Thursday amid persistent concerns over hawkish signals from the Federal Reserve, while the Japanese yen rose slightly as markets watched for any intervention in currency markets by the government.
The dollar remained perched at 10-month highs, with the dollar index and dollar index futures moving little in Asian trade. But most regional currencies remained weak against the greenback, after the Fed signaled that it will keep U.S. interest rates higher for longer.
The Japanese yen rose 0.2%, recovering slightly from a 10-month low. The currency was now spitting distance from the 150 level to the dollar- a milestone that some traders believe will trigger intervention by the government.
Persistent weakness in the yen drew several warnings from Japanese government officials over betting against the yen. The currency was battered by a growing gap between local and U.S. yields, following hawkish signals from the Fed.
An ultra-dovish outlook from the Bank of Japan was also a key driver of the yen’s recent weakness, after the central bank last week said it had no immediate plans to lift rates from negative levels.
The Japanese government had sold record levels of dollars in late-2022 to fish the yen from over 30-year lows. But since then, U.S. interest rates have risen further, pointing to more pressure on the yen. The currency is also expected to retest 30-year lows if it breaks above 150.
Markets were also awaiting key Japanese inflation data, due on Friday.
Broader Asian currencies moved in a flat-to-low range. The Indian rupee rose slightly, but remained close to record lows amid pressure from a recent spike in oil prices.
Australia’s dollar rose 0.3%, recovering
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