Asian forex rises as risk sentiment improves

The USD/CNY pair slid 0.5%, the yen’s USD/JPY pair declined 0.8%, the won’s USD/KRW pair tumbled 1.4%, while the Singapore dollar’s USD/SGD dropped 0.6%

Most Asian currencies rose on Wednesday, supported by a weaker dollar and improving risk sentiment after U.S. President Donald Trump agreed to a temporary ceasefire with Iran, while New Zealand’s central bank held interest rates unchanged as expected.

Focus in Asia also turned to the Reserve Bank of India, which is due to announce its policy decision later on Wednesday.

The US Dollar Index slid nearly 1% to a four-week low. US Dollar Index Futures also traded 0.9% lower as of 03:28 GMT.

Trump said late Tuesday he had agreed to a two-week “double-sided” ceasefire with Iran, just hours before a self-imposed deadline to launch large-scale strikes if Tehran failed to reopen the Strait of Hormuz.

Oil prices plunged below $100 per barrel in early trade on Wednesday.

These negotiations and a pulling back from the brink is certainly a positive including for Asia which has been and continues to be disproportionately hurt by a Strait of Hormuz closure, MUFG analysts said in a note.

The onshore Chinese yuan rose to a three-year high against the dollar, with the USD/CNY pair sliding 0.5% to 6.82 yuan — its lowest since March 2023.

The yen’s USD/JPY pair declined 0.8%, while the won’s USD/KRW pair tumbled 1.4%.

The Singapore dollar’s USD/SGD dropped 0.6%.

The New Zealand dollar’s NZD/USD pair jumped 1.7%, and was further supported after the Reserve Bank of New Zealand kept its official cash rate unchanged at 2.25%, in line with expectations.

The central bank warned that higher oil prices linked to the Middle East war would likely push inflation higher in the near term, even as economic activity softens.

The Australian dollar’s AUD/USD pair climbed 1.2%.

The Indian rupee’s USD/INR pair dropped 0.5% to a three-week low ahead of the RBI decision.

The RBI is widely expected to keep its benchmark repo rate unchanged at 5.25%, maintaining a pause after its last move in February, as policymakers assess the impact of volatile oil prices and global uncertainty on the domestic economy.