Asian Currencies Gain Slightly as Fed Minutes Bolster Rate Cut Expectations; Yen Near 8-Month Low

Most Asian currencies edged higher on Thursday after the U.S. Federal Reserve’s September meeting minutes reinforced expectations of interest rate cuts later this year. Meanwhile, the Japanese yen hovered near an eight-month low as investors scaled back expectations for further tightening by the Bank of Japan (BOJ).

The U.S. Dollar Index slipped 0.2% in Asian trading hours, halting a three-day winning streak. Dollar Index Futures also dipped 0.2% as of 04:19 GMT, reflecting subdued sentiment ahead of fresh economic data.

The Fed minutes revealed that a “substantial majority” of policymakers still see room for lowering borrowing costs in 2025. However, some officials warned against cutting rates too quickly amid persistent inflation concerns. Others cited weakening growth and labor market conditions as reasons for cautious easing to avoid a deeper slowdown.

Investor sentiment remained mixed, as the ongoing partial U.S. government shutdown delayed crucial reports on September jobs and inflation, leaving the Fed without key indicators before its next meeting. The uncertainty kept currency markets subdued, with regional pairs posting modest moves.

The South Korean won strengthened slightly, with the USD/KRW pair down 0.2%, while the Singapore dollar also edged higher, as USD/SGD slipped 0.1%. The offshore Chinese yuan (USD/CNH) rose 0.3%, and the onshore yuan (USD/CNY) held steady. The Indian rupee (USD/INR) remained near record lows, while the Australian dollar (AUD/USD) advanced 0.3%.

The Japanese yen (USD/JPY) traded at 152.5 on Thursday after touching 152.99 in the previous session—its weakest since mid-February. Sanae Takaichi’s win in Japan’s Liberal Democratic Party leadership race boosted expectations of fiscal stimulus, reducing pressure on the BOJ to tighten policy further. Analysts at MUFG noted that expectations for slower BOJ rate hikes continue to weigh on the yen and other regional currencies.