Asian currencies traded cautiously on Thursday as global investors closely monitored the high-profile meeting between U.S. President Donald Trump and Chinese President Xi Jinping. At the same time, persistent inflation concerns tied to rising oil prices continued to strengthen the U.S. dollar and pressure emerging Asian currencies.
The U.S. Dollar Index slipped slightly by 0.1% after reaching a two-week high in the previous trading session. The greenback remained supported after stronger-than-expected U.S. inflation data reinforced expectations that the Federal Reserve may keep interest rates higher for a longer period.
Market attention remained focused on the Trump-Xi summit, where both leaders aimed to stabilize trade relations amid ongoing tensions involving tariffs, artificial intelligence, semiconductor exports, Taiwan, and China’s ties with Iran. Chinese President Xi Jinping said recent trade discussions between the two countries had produced “positive outcomes” and emphasized that continued cooperation was important for global economic stability.
The Chinese yuan strengthened modestly, with the USD/CNY pair falling 0.1% to its lowest level since February 2023. Meanwhile, the Japanese yen remained largely unchanged against the dollar, while South Korea’s won weakened slightly. The Singapore dollar and Australian dollar also traded in narrow ranges as investors awaited more signals from global policymakers.
The Indian rupee continued to face heavy pressure, with the USD/INR pair climbing 0.2% to a record high near 95.85. Analysts attributed the rupee’s weakness to surging crude oil prices, persistent foreign capital outflows, and concerns about India’s widening trade deficit.
Oil prices above $100 per barrel, driven by tensions surrounding Iran, have intensified fears of imported inflation across Asia. Rising energy and transportation costs also contributed to higher U.S. producer and consumer inflation figures, further supporting the dollar and weakening regional currencies.
