Asian Currencies Falter as Dollar Thrives

By Fabiana Negrin Ochoa and James Glynn

A resurgent dollar has come back to haunt Asian currencies as market bets on central banks' interest rates drive yield-hunters to the greenback.

The DXY index edged above 103 for the first time since April 2025 on Thursday, touching levels not seen since the shock announcement of U.S. tariffs on "Liberation Day."

The dollar has strengthened this week since U.S. inflation data came in hotter than expected, fueling expectations of tightening by the Federal Reserve.

Remarks from Fed officials added fuel to the fire, and markets now fully price in a December move. Some even see scope for a potential 50-basis-point hike.

Asian currencies are feeling the pressure, retracing gains made from the pullback in oil prices. As most of the region's economies are energy importers, the oil shock caused by the U.S.-Iran war has weighed on local currencies.

The combination of a firmer greenback, higher U.S. yields and elevated oil prices create a tough near-term backdrop for Asian currencies, said Lloyd Chan, senior analyst at MUFG.

The yen is once again approaching the potential intervention zone, within striking distance of the historically sensitive 160-163 yen range against the dollar, he said in a note.

Although market participants expect rate hikes from the Bank of Japan as well, a more aggressive Fed would mean that the rate gap between U.S. and Japan will stay wide enough to sustain the appeal of carry trades--where investors borrow in low-yielding currencies to buy higher-yielding assets.

The dollar was last trading at 159.73 yen.

Elsewhere, the Australian dollar was also struggling, trading at its weakest levels against the greenback since March.

For the Aussie, pressure from Fed tightening bets is compounded by a shift in market pricing toward interest-rate cuts by the Reserve Bank of Australia.

Markets are flirting with the idea of RBA easing policy settings from June onward, said Sean Callow, a senior currency strategist at ITC Markets.

The Aussie was trading at 68.41 U.S. cents, below the 70-cent barrier seen as a key support level.

Elsewhere, Southeast Asian currencies weakened broadly, partly reflecting broader risk-off sentiment stemming from the tech stock jitters sparked by the slump in Nvidia shares.

Indonesia's rupiah touched yet another record low against the greenback.

The rupiah is the currency least able to absorb dollar strength, said iFast research analyst Kok Jun Yong, noting that domestic political uncertainty has made the currency especially fragile.

South Korea's won and India's rupee are holding up better than their regional peers.

The won's pace of appreciation is moderating but it has held on to gains, and the macro backdrop remains relatively supportive, said Chan at MUFG.

The rupee meanwhile continues its sharp recovery after a long stretch of weakness.

OCBC strategists Sim Moh Siong and Christopher Wong attribute the Indian currency's resilience in the face of a firmer dollar and higher Treasury yields to renewed foreign portfolio inflows.

If upcoming Indian inflation data reinforces expectations for further Reserve Bank of India tightening, that might provide additional near-term support for the rupee, said Chan.

--Ying Xian Wong contributed to this report

Write to Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com and James Glynn at james.glynn@wsj.com

(END) Dow Jones Newswires

November 12, 2026 00:46 ET (05:46 GMT)