Investing.com– Asian currencies were largely subdued on Tuesday as markets were cautious ahead of interest rate decisions from major central banks, including the U.S. Federal Reserve.
The Fed is expected to cut interest rates by 25 basis points on Wednesday, but signal a slower pace of easing in 2025.
Expectations of a slower rate cut path have underpinned the U.S. dollar and created downward pressure on Asian currencies.
The US Dollar Index was largely steady in Asia hours on Tuesday, while the US Dollar Index Futures were marginally higher.
Asia FX dips ahead of regional interest rate decisions
The Japanese yen’s USD/JPY pair was largely unchanged. Reuters had reported the Bank of Japan was likely to keep interest rates unchanged this week, in contrast to earlier expectations of a hike.
The Indonesian rupiah’s USD/IDR pair rose 0.4% as the country’s central bank is expected to keep its key interest rate steady on Wednesday, to support the currency.
The Bank of Thailand is expected to is expected to keep its key interest rates unchanged on Wednesday following an unexpected rate cut in October.
The Thai baht’s USD/THB pair inched 0.2% higher.
In the Philippines, the peso’s USD/PHP pair ticked down 0.1% ahead of the Bangko Sentral ng Pilipinas’ (BSP) interest rate decision on Thursday. The central bank is expected to reduce its key policy rates by 25 basis points for the third consecutive time.
Dollar hovers near 3-week high, pressures Asian currencies
The dollar index reversed course to gain slightly and hovered near its highest level since November 26, even as traders positioned for a Fed rate cut next week.
