Asian currencies continued to weaken on Friday as stronger-than-expected U.S. economic data strengthened the dollar and increased expectations that the Federal Reserve may maintain a tighter monetary policy stance for longer.
The Indian rupee remained under heavy pressure, falling close to the 96-per-dollar mark and reaching fresh record lows against the U.S. currency.
Investors also closely monitored ongoing discussions between U.S. President Donald Trump and Chinese President Xi Jinping during their summit in Beijing, with markets searching for signals on trade policy and global economic cooperation.
The U.S. Dollar Index rose another 0.2% during Asian trading hours, extending gains for a fifth consecutive session and heading toward its strongest weekly performance in more than two months.
Recent U.S. economic reports reinforced expectations that the Federal Reserve could delay interest rate cuts. Retail sales data for April showed steady consumer spending, while unemployment claims remained relatively low, highlighting continued strength in the labor market. Import prices also climbed sharply due to rising fuel costs.
Earlier inflation reports in the United States also exceeded market expectations, adding to concerns that inflation pressures may remain persistent.
Financial markets have now significantly reduced expectations for any Fed rate cuts this year. Investors are increasingly considering the possibility of another rate hike before the end of 2026.
Across Asia, several regional currencies posted weekly declines against the dollar.
The Japanese yen weakened modestly, with traders remaining alert for any potential intervention by Japanese authorities if currency volatility increases further.
South Korea’s won also came under pressure, while the Australian dollar fell as investors shifted toward the safety of the stronger U.S. dollar.
The Singapore dollar slipped slightly and remained on track for a weekly decline amid broader regional weakness.
China’s yuan showed limited movement after several days of losses, supported somewhat by cautious optimism surrounding the Trump-Xi summit. However, markets remained uncertain after the first round of talks concluded without any major policy breakthroughs or confirmed trade agreements.
According to official statements, discussions between the two leaders included trade relations, artificial intelligence cooperation, Middle East tensions, and energy purchases. China also reportedly expressed interest in increasing imports of U.S. oil.
Investor sentiment remained fragile as geopolitical tensions involving Iran continued to influence global oil prices and financial markets.
The Indian rupee was particularly affected by rising crude oil prices, foreign investment outflows, and concerns over the country’s growing import costs. India, which relies heavily on imported energy, has faced additional pressure from disruptions affecting global oil supply routes.
Analysts noted that despite hopes for easing geopolitical tensions, the rupee may continue to underperform compared to several major Asian and developed-market currencies in the near term.