Asian forex and U.S. dollar hold steady as traders weigh Iran war signals; rupee approaches historic lows

Investing.com - On Thursday, most Asian currencies remained largely unchanged, while the US dollar stayed firm as investors weighed mixed signals regarding the end of Middle East conflict efforts.

The US Dollar Index was flat during Asian trading hours, after rising for two consecutive days, supported by safe-haven demand.

As of 00:20 Eastern Time (04:20 GMT), US Dollar Index futures also remained mostly unchanged.

Get advanced Asian forex insights and analyst commentary with InvestingPro

Iran weighs US peace proposals, denies direct peace negotiations

Iran stated it is reviewing US proposals aimed at ending hostilities, but signals about progress in negotiations are mixed, keeping investors cautious.

Although Iran has not officially accepted the plan, it has not completely rejected it either, sparking cautious hope for a possible easing of tensions.

Iran publicly denied direct negotiations with Washington, citing persistent key disagreements. Due to the lack of clarity, traders remain cautious, and Thursday’s oil markets performed poorly.

Mitsubishi UFJ Financial Group analysts said in a report: “In the absence of credible easing signs and normalizing energy flows through the Strait of Hormuz, rising oil prices and higher US yields may continue to support the dollar, while Asian currencies that import oil remain fragile.”

They added: “In fact, Brent crude prices are still above $100 per barrel, despite pulling back from recent highs, which continues to tilt global inflation risks upward.”

Asian forex markets remain subdued; rupee near historic lows

Regional currencies traded within narrow ranges as investors hesitated to take large positions amid uncertainty over Iran’s review of US proposals.

USD/JPY remained flat, while USD/KRW edged up 0.1%.

USD/INR rose 0.3% to 94.15 rupees, slightly below the previous day’s high of 94.20 rupees, a historic peak.

Onshore RMB/USD was largely unchanged, while SGD/USD rose 0.1%.

AUD/USD edged up slightly by 0.1%.

The currency markets are also influenced by US monetary policy expectations, as investors weigh bets that US interest rates will stay high for an extended period, which could continue to support the dollar and limit gains in Asian currencies.

This article was translated with the assistance of AI. For more information, please see our Terms of Use.