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.

By Chuck Mikolajczak

NEW YORK (Reuters) -The dollar edged higher on Tuesday in thin holiday trading as the expected slower path of interest rate cuts from the U.S. Federal Reserve compared with other global central banks continued to command market direction.

The greenback has jumped more than 7% since the end of September, powered in part by growing expectations the U.S. economy will see accelerated growth under policies from President-elect Donald Trump, while sticky inflation has dampened expectations on how aggressive the Fed will be in reducing interest rates.

Those expectations for the U.S. stand in contrast to growth forecasts and the interest rate views for other global economies and central banks, which have led to expanding interest rate differentials.

The Fed last week projected a more measured path of rate cuts than the market had been anticipating, providing another boost to U.S. Treasury yields, with the benchmark 10-year note yield reaching a 7-month high of 4.629% on Tuesday.

“The markets are all having a little bit of a Christmas bonus with the election and they’re expecting positive things,” said Joseph Trevisani, senior analyst at FX Street in New York.

“Certainly that’s true for the dollar because we’ve seen a pullback in the expectations for further rate cuts, and as we all know, the most important factor for the currency markets is the rate structure between the central banks.”

The , which measures the greenback against a basket of currencies, rose 0.14% to 108.24, with the euro down 0.15% at $1.0389. The index is on track for its fifth gain in the past six sessions.

Trading volumes are likely to be thin through next week as the year draws to a close, with the economic calendar very light, and analysts expect rates to be the main driver for the foreign exchange market until the U.S. employment report on Jan. 10.

Sterling weakened 0.06% to $1.2527.

Against the yen, the dollar strengthened 0.1% to 157.34 as the Japanese currency remains near levels that have recently prompted Japanese authorities to intervene in an effort to support it.

Minutes from the Bank of Japan’s meeting last week showed policymakers agreed in October to keep raising interest rates if the economy moves in line with their forecast, but some stressed the need for caution on uncertainty over U.S. economic policy.

Trump’s return to the White House has brought about uncertainty over how his expected policies for tariffs, lower taxes and immigration curbs might affect policy.