Investing.com– Most Asian currencies edged lower on Friday with the South Korean won falling amid ongoing political unrest, while the Japanese yen rose on rate hike bets after an inflation reading from Tokyo.

The ticked higher in Asian trade, remaining near a 2-year high it touched last week. The also ticked higher.

Most Asian currencies were set for a weekly fall after sharp losses last week when the Federal Reserve projected fewer rate cuts in 2025. The Fed outlook had provided renewed strength to the dollar and created downward pressure on Asian currencies.

Japanese yen rises on rate hike bets

The Japanese yen’s pair fell 0.3% on Friday.

in Japan’s capital grew more than expected in December due to increased price pressures, government data showed on Friday, keeping alive chances of a near-term rate hike by the Bank of Japan (BoJ).

Some Bank of Japan policymakers saw conditions aligning for a near-term rate hike, with one predicting action “in the near future,” according to a summary of opinions from December’s meeting. 

Other data on Friday showed that the country’s  fell in November, but contracted at a slower-than-expected pace from the previous month amid subdued foreign demand.

Asia FX under pressure as dollar remains near 2-yr high

The Indian rupee fell further against the U.S. dollar after hitting a record low in the precious session. The pair inched up 0.2% up to 85.713 rupees.

The Chinese yuan’s onshore pair was largely muted on Friday. 

Chinese data showed  fell at a reduced pace in November, offering some relief to the struggling sector, though weak domestic demand continues to hamper recovery efforts.

The Singapore dollar’s  pair rose 0.1%, while the Australian dollar’s  was slightly lower, 

The Philippine peso’s pair fell 0.4%, while the Indonesian rupiah’s pair rose 0.4%

The U.S. dollar has remained strong, driven by the Federal Reserve’s hawkish stance on rates through 2025 and expectations of higher inflation and strong economic performance under the incoming Donald Trump administration.

South Korean won slips amid deepening political unrest

The South Korean won’s pair rose 0.7% on Friday, after jumping the same in the previous session. The currency was set to lose nearly 2.5% for the week.

South Korea’s acting president, Prime Minister Han Duck-soo, faces an impeachment vote on Friday amid a political crisis sparked by the Constitutional Court’s first hearing on President Yoon Suk Yeol’s short-lived martial law. 

The push to impeach Han has deepened the crisis, placing the nation’s democracy in uncertain waters and drawing concern from allies.

Investing.com– Most Asian currencies were lower on Thursday as the dollar remained steady near a two-year high, while the Indian rupee fell to an all-time low.

Most markets in the region were closed on Wednesday for Christmas.

The was largely steady, while the ticked lower in Asian trade on Thursday.

Asian currencies weakened sharply last week after the Federal Reserve projected fewer rate cuts in 2025, citing concerns over sticky U.S. inflation. 

Indian rupee hits record low, dollar remains near 2-yr high

The Indian rupee fell to an all-time low against the U.S. dollar, with the  pair hitting a record peak of 85.497 rupees with a 0.2% fall on Thursday. The pair had breached the 85 rupee mark last week.

The Chinese yuan’s onshore pair edged higher on Thursday. Chinese authorities have decided to issue a record-breaking 3 trillion yuan ($411 billion) in special treasury bonds next year, in an intensified fiscal effort to stimulate a struggling economy, Reuters reported on Tuesday.

The Singapore dollar’s  pair rose 0.1%, while the Australian dollar’s pair fell 0.2%.

The South Korean won’s pair rose 0.4%, while the Philippine peso’s pair fell more than 1%, bucking the regional trend.

The U.S. dollar has shown notable strength in recent months, supported by a combination of domestic and global factors. 

One key driver has been the Federal Reserve’s monetary policy stance, which, despite earlier rate cuts, has shifted to maintaining higher interest rates for 2025 with projections of only two cuts.

Additionally, expectations of potential tariffs under the incoming Donald Trump administration have led to projections of higher inflation and robust economic performance, further boosting the dollar’s appeal.

With expectations of the dollar remaining strong, the outlook for Asian currencies has become more clouded amid global uncertainties.

Japanese yen muted amid rate hike bets

The Japanese yen’s pair was largely unchanged on Thursday.

Japan’s government is preparing a record $735 billion budget for the fiscal year starting in April, driven by rising social security and debt-servicing expenses, according to a draft obtained by Reuters.

BOJ Governor Kazuo Ueda said on Wednesday that the economy is expected to make progress toward sustainably reaching the central bank’s 2% inflation target next year, hinting that an interest rate hike could be approaching.

The Bank of Japan ended negative interest rates in March and increased its short-term policy rate to 0.25% in July. It has indicated a willingness to raise rates further if wage and price trends align with its forecasts.

Investing.com – The US dollar slipped slightly Monday, as US bond yields retreated, but remained near recent highs as the end of the year draws near.

At 04:5 ET (09:55 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower to 107.690.

However, the index was still on course for monthly gains of over 2%, bringing year-to-date gains to almost 7%.

Dollar on course for hefty annual gains

The dollar has been helped by rising US Treasury yields, with the benchmark 10-year note hitting a more than seven-month high last week. This yield, however, slipped by to 4.599% on Monday.

The election of Donald Trump as the new president also gave the dollar a boost as his policies of looser regulation, tax cuts, tariff hikes and tighter immigration are seen as both pro-growth and inflationary, and are likely to keep the Federal Reserve from cutting interest rates rapidly next year.

The US central bank projected just two 25 bp rate cuts in 2025 at its last policy meeting of the year earlier this month, and markets are now pricing in just about 35 basis points of easing for 2025. 

Trading ranges are likely to be tight this holiday-impacted week, and the focus will be on weekly numbers on Thursday and data a day later, as well as comments from FOMC member .

Euro gains after Spanish inflation

In Europe, rose 0.1% to 1.0439, bouncing slightly after data showed that Spain’s annual EU-harmonized rose to 2.8% in December, up from the 2.4% figure recorded in November.

The cut interest rates earlier this month and signaled more cuts ahead as economic growth in the region stagnates.

However, the next interest rate cut could be longer in coming after a recent uptick in inflation, ECB Governing Council member Robert Holzmann was quoted as saying on Saturday.

accelerated in November to 2.2% from 2.0% a month earlier and above the ECB’s 2% target rate.

traded 0.1% higher to 1.2595, with little in the way of UK economic data to study ahead of Thursday’s release.

That is expected to show that the country’s manufacturing sector remained firmly in contraction in December, after data showed that Britain’s economy failed to grow in the third quarter.

Bank of England policymakers voting 6-3 to keep interest rates on hold at the meeting earlier this month, a more dovish split than expected, suggesting rate cuts will continue next year.

Yen remains weak; risk of intervention supports

In Asia, traded largely flat at 157.76, around five-month highs for the pair, with only the risk of Japanese intervention preventing another test of the 160 level last seen in July.

The signaled that it will take its time to consider more interest rate hikes after the central bank held interest rates steady at 0.25% at this month’s meeting.

rose 0.2% to 7.3136, remaining close to a one-year high as the prospect of more fiscal spending and looser monetary conditions in the coming year weighed on the currency.