Asian Currencies Steady as Dollar Nears 18-Month High Ahead of US CPI

Asian currencies traded in narrow ranges on Tuesday as investors remained cautious ahead of crucial U.S. inflation data, while the U.S. dollar stayed near an 18-month high amid geopolitical tensions and sustained demand for safe-haven assets.

The U.S. Dollar Index slipped 0.2% to 102.44 by 03:55 GMT, following gains that pushed the greenback to its strongest level since April 2025 during the previous session.

The dollar continued to benefit from elevated U.S. Treasury yields, relatively high interest rates, resilient economic growth, and uncertainty surrounding global geopolitical developments.

Market participants are closely watching Wednesday's U.S. Consumer Price Index (CPI) report, which could provide fresh insights into the Federal Reserve's interest rate outlook ahead of its late-October policy meeting.

Persistent tensions in the Middle East and Ukraine have also supported the dollar, particularly as attacks on energy infrastructure threaten global supplies and keep oil prices elevated.

Brent crude futures declined 0.9% to $105.74 per barrel on Tuesday after advancing 1.8% in the previous trading session.

Across Asian foreign exchange markets, most currencies showed limited movement. The Japanese yen strengthened slightly, with USD/JPY falling 0.2%, while China's offshore yuan remained stable. The onshore USD/CNY pair edged 0.1% higher.

The South Korean won weakened against the dollar, with USD/KRW climbing 0.6% after declining 0.4% on Monday.

Meanwhile, the Indian rupee maintained its recovery following intervention by the Reserve Bank of India (RBI). USD/INR slipped 0.1% to 95.689 after falling more than 1% on Monday, when the rupee recorded its strongest daily gain in six months.

The Indian currency closed Monday at 95.77 per dollar after the RBI introduced measures targeting speculative currency trading and excessive dollar demand, including tighter derivatives restrictions.

Elsewhere, the Singapore dollar remained largely unchanged, while the Australian dollar traded flat against the greenback.

Minutes from the Reserve Bank of Australia's September meeting highlighted ongoing concerns about inflation. Policymakers unanimously increased the benchmark interest rate by 25 basis points to 4.60%, marking the fourth rate hike this year.

The minutes also suggested that additional monetary tightening remains possible if inflationary pressures persist, leaving investors attentive to upcoming economic indicators and central bank decisions.