Asian currencies weaker as yen hovers near four-decade low

The USD/JPY rose to 162.68 after the dollar added almost 2.5% against the yen in the second quarter, marking its fourth straight quarterly advance

Asian currencies traded mostly weaker on Wednesday as the yen hovered near a four-decade low as traders remained on alert for possible Japanese intervention.

Sentiment was shaped by geopolitical developments after Tehran declined to meet U.S. envoys who had travelled to the region, highlighting that negotiations remain far apart on a framework that would fully reopen the Strait of Hormuz.

The USD/JPY rose to 162.68 after the dollar added almost 2.5% against the yen in the second quarter, marking its fourth straight quarterly advance. The yen remained under pressure despite data showing an improvement in business sentiment among large manufacturers in the Bank of Japan’s Tankan survey, while the final au Jibun Bank manufacturing PMI remained firmly in expansion territory.

The USD/CNY and the USD/CNH edged up 0.1%, even after China’s latest factory surveys painted a resilient picture of manufacturing activity.

The USD/KRW jumped 0.3% even after South Korea reported stronger June exports, a wider trade surplus and continued resilience in external demand.

The USD/TWD advanced 0.3%, while the USD/AUD added 0.4% after Australian building approvals unexpectedly declined in May.

The USD/IDR advanced 0.4%, while the USD/THB and the USD/MYR jumped 0.3% and the USD/INR was little changed as the dollar broadly firmed across the region.

Economic releases painted a broadly resilient picture. Indonesia’s latest data pointed to easing inflationary pressures while the country maintained another trade surplus, underscoring a stable macroeconomic backdrop.

Manufacturing activity continued to expand across Thailand, Malaysia and the Philippines, while India’s factory activity moderated slightly from the previous month but remained firmly in expansion territory.