Asian Currencies Steady as Rupee Hits Record Low Amid Fed Rate Cut Bets

Most Asian currencies held steady on Thursday after modest gains, as markets continued to price in the possibility of a Federal Reserve rate cut next week. The US Dollar Index edged 0.1% higher following an overnight dip to a one-month low, while Dollar Index Futures rose 0.2% as of 06:14 GMT.

The Indian rupee remained the region’s key underperformer, with the USD/INR pair touching a new all-time high of 90.46, surpassing the previous record of 90.29 set a day earlier. The pair later stabilized near 90.22. The rupee’s persistent weakness reflects ongoing external pressures, including sluggish trade and portfolio flows, low foreign direct investment, and uncertainty surrounding a potential U.S.–India trade deal. Analysts at MUFG noted that the Reserve Bank of India appears to be taking a more hands-off approach toward currency intervention. They added that any policy cues from the upcoming RBI meeting will be closely watched. MUFG also expects that a trade agreement—in which tariffs could fall from 50% to 25%—may offer the rupee some relief by early 2026.

Across Asia, most currencies traded in narrow ranges as investors awaited fresh U.S. economic signals. Recent weaker-than-expected ADP employment data and a soft ISM services reading have strengthened expectations for a Fed rate cut. MUFG analysts anticipate a divided December Fed meeting but believe the outcome will likely point toward easing. Traders are now focused on Friday’s U.S. PCE inflation report, a key indicator for the Fed’s policy trajectory.

The Japanese yen and Chinese yuan saw minimal movement, while the Singapore dollar gained 0.2%. The South Korean won weakened, with USD/KRW climbing 0.4%. Meanwhile, the Australian dollar advanced 0.2%, supported by broader stability in regional markets.