Investing.com –Asian currencies traded mixed on Tuesday as the U.S. dollar strengthened ahead of the Federal Reserve’s policy decision later this week, while the Japanese yen weakened and the Indonesian rupiah remained under pressure near record lows.
The euro and sterling also slipped as investors positioned ahead of key central-bank decisions this week.
The U.S. dollar index rose 0.2%, while the USD/JPY pair gained 0.2% extending the yen’s retreat from last week’s safe-haven rally. The EUR/USD pair and the GBP/USD pair slipped 0.1% to 1.3331.The USD/IDR pair rose 0.19% to 18,129.1, leaving the rupiah close to its weakest levels on record.
The yen was among the strongest-performing major currencies last week as concerns over AI-related equity valuations prompted investors to seek safer assets. That demand has since eased, leaving the currency vulnerable ahead of a busy week of central-bank decisions that could reshape the global interest-rate outlook.
Yen retreats as BOJ prepares to hold rates
The yen was last reported 0.2% weaker at 157.73 per dollar, further retreating from a one-month high reached last week. The USD/JPY pair was around 157.70.
The Bank of Japan is widely expected to keep its policy rate unchanged at 1.25% at its two-day meeting concluding Friday, while signaling that further increases remain possible as inflation pressures build.
The BOJ meeting follows the Federal Reserve’s policy decision, due Wednesday, with the U.S. central bank expected to leave rates unchanged at its two-day meeting. Four other major central banks are also scheduled to announce policy decisions this week.
Rupiah near record lows as BI weighs stronger measures
The USD/IDR pair rose 0.2% to 18,129.1, extending pressure on the rupiah after the currency fell 0.4% on Monday and approached the historic low recorded in early June. The rupiah has lost around 8% against the dollar this year, putting it alongside the Philippine peso among Asia’s weakest performers.
Elevated global bond yields, higher oil prices and concerns that Indonesia could lose its emerging-market classification under MSCI have contributed to foreign outflows and renewed selling pressure on the currency. MSCI’s proposed reclassification has also raised concerns about reduced foreign investment in Indonesian equities, adding to the challenges facing the rupiah.
Bank Indonesia pledged last week to make “necessary adjustments” to its policy tools to maintain rupiah stability. It kept its benchmark rate at 5.75%, opting for currency intervention and stronger hedging incentives rather than a benchmark-rate increase that could weigh on the domestic economy.
