Asian forex firm, Indian rupee recovers from recent lows

Other Asian currencies also firmed marginally, but were nursing losses in recent sessions

Most Asian currencies firmed on Tuesday, with the Indian rupee recovering from recent lows after New Delhi and Washington announced a trade deal.

The Australian dollar drifted higher before a widely expected rate hike by the Reserve Bank, while the yen steadied after whipsawing on uncertainty over government intervention.

Other Asian currencies also firmed marginally, but were nursing losses in recent sessions.

The Indian rupee was a standout performer on Tuesday, with the USD/INR pair dropping 1.5% to its lowest level since mid-January.

The rupee soared after the U.S. and India announced a trade deal on Monday, under which Washington will slash its tariffs on New Delhi to 18% from 50%.

In exchange, India will further open up its markets, and will also curb its purchases of Russian oil.

The Australian dollar’s AUD/USD pair gained 0.2%, remaining near a near three-year high.

Markets were waiting for a widely expected 25 basis point rate hike by the Reserve Bank later in the day, as the central bank moves to curb a late-2025 resurgence in inflation.

Bets on a February hike were cemented by hotter-than-expected consumer inflation data for the fourth quarter, with core inflation also running well above the RBA’s 2% to 3% annual target range.

But beyond the hike, focus was squarely on whether the RBA will signal a new tightening cycle. Strength in the labour and housing market could also see the RBA present a hawkish outlook.

Broader Asian currencies drifted higher on Tuesday, but were nursing deep losses in the past two sessions.

The yen’s USD/JPY pair traded back above 155 yen. The yen was pressured by uncertainty over whether Japanese authorities will intervene to support the battered currency.

The won’s USD/KRW pair dropped 0.3% after consumer inflation data for January read slightly softer than expected.

The yuan’s USD/CNY pair declined 0.1%. The yuan was a major exception among Asian currencies in recent weeks, as a series of strong fixings put the currency at its strongest level since mid-2023.