Investing.com-- Most Asian currencies edged lower on Friday with the South Korean won falling amid ongoing political unrest, while the Japanese yen rose on rate hike bets after an inflation reading from Tokyo.
The US Dollar Index ticked higher in Asian trade, remaining near a 2-year high it touched last week. The US Dollar Index Futures also ticked higher.
Most Asian currencies were set for a weekly fall after sharp losses last week when the Federal Reserve projected fewer rate cuts in 2025. The Fed outlook had provided renewed strength to the dollar and created downward pressure on Asian currencies.
Japanese yen rises on rate hike bets
The Japanese yen’s USD/JPY pair fell 0.3% on Friday.
Consumer price index inflation in Japan’s capital grew more than expected in December due to increased price pressures, government data showed on Friday, keeping alive chances of a near-term rate hike by the Bank of Japan (BoJ).
Some Bank of Japan policymakers saw conditions aligning for a near-term rate hike, with one predicting action "in the near future," according to a summary of opinions from December's meeting.
Other data on Friday showed that the country's factory output fell in November, but contracted at a slower-than-expected pace from the previous month amid subdued foreign demand.
Asia FX under pressure as dollar remains near 2-yr high
The Indian rupee fell further against the U.S. dollar after hitting a record low in the precious session. The USD/INR pair inched up 0.2% up to 85.713 rupees.
The Chinese yuan’s onshore pair USD/CNY was largely muted on Friday.
Chinese data showed industrial profits fell at a reduced pace in November, offering some relief to the struggling sector, though weak domestic demand continues to hamper recovery efforts.
The Singapore dollar’s USD/SGD pair rose 0.1%, while the Australian dollar’s AUD/USD was slightly lower,
The Philippine peso's USD/PHP pair fell 0.4%, while the Indonesian rupiah’s USD/IDR pair rose 0.4%
The U.S. dollar has remained strong, driven by the Federal Reserve's hawkish stance on rates through 2025 and expectations of higher inflation and strong economic performance under the incoming Donald Trump administration.
South Korean won slips amid deepening political unrest
The South Korean won’s USD/KRW pair rose 0.7% on Friday, after jumping the same in the previous session. The currency was set to lose nearly 2.5% for the week.
South Korea's acting president, Prime Minister Han Duck-soo, faces an impeachment vote on Friday amid a political crisis sparked by the Constitutional Court's first hearing on President Yoon Suk Yeol's short-lived martial law.
The push to impeach Han has deepened the crisis, placing the nation's democracy in uncertain waters and drawing concern from allies.