Most Asian currencies fell on Monday as the U.S. dollar strengthened in the wake of American strikes on three Iranian nuclear facilities, stoking demand for safe-haven assets. The dollar index added roughly 0.3% in early Asian trade, extending last week’s rise after several Federal Reserve officials signaled interest rates may stay higher for longer. Investors now look to Fed Chair Jerome Powell’s testimony before Congress on Tuesday and Wednesday for policy clues.
Safe-haven flows favored the greenback even as traditional refuges such as gold and the Japanese yen weakened. Tehran’s reported threat to block the Strait of Hormuz—a choke-point for nearly a fifth of global crude shipments—fueled a jump in oil prices and heightened inflation worries across energy-dependent Asia.
The Chinese yuan slipped, with the onshore USDCNY pair up 0.1%, while the Singapore dollar’s USDSGD pair advanced 0.2%. South Korea’s won led regional losses, the USDKRW pair climbing 0.7%. India’s rupee also softened, nudging USDINR 0.2% higher.
Positive economic data offered little support. Australia’s AUDUSD fell 0.7% despite June PMIs showing resilient manufacturing and services growth. Japan’s yen lost 0.5% even after surveys revealed the first factory-sector expansion in 11 months and faster service-sector growth.
With geopolitical tensions elevated and U.S. monetary policy still restrictive, traders remain cautious. Any escalation in the Middle East or unexpectedly hawkish remarks from Powell could keep currency volatility high in the days ahead.
