Asian Currencies Steady as Markets Await Fed Rate Decision; Indian Rupee Hits New Record Low

Asian currencies traded mostly steady on Wednesday as investors turned their focus to the upcoming U.S. Federal Reserve meeting, where markets are increasingly pricing in a potential interest rate cut. The cautious sentiment kept most regional currencies near the flatline, while the Indian rupee weakened further to a fresh all-time low, pressured by persistent capital outflows and rising dollar demand.

The U.S. Dollar Index slipped 0.2% in Asian hours, with Dollar Index Futures also down 0.2% as of 06:32 GMT. Despite the softer dollar, the rupee’s USD/INR pair surged to a record 90.32 early in the session and hovered at 90.27 by 06:25 GMT. Analysts pointed to weak trade performance, tepid portfolio inflows, limited foreign direct investment, and ongoing uncertainty around a U.S.–India trade agreement as key factors driving the imbalance between dollar supply and demand. MUFG analysts emphasized that heightened import needs and a widening current account deficit are amplifying pressure on the currency.

Across the region, most Asian currencies remained stable ahead of critical U.S. economic data releases, including the ADP private-sector jobs report and the November PCE inflation reading, both of which could influence the Fed’s policy direction next week. The Japanese yen edged 0.2% lower against the dollar, the South Korean won held near unchanged levels, and the Chinese yuan in onshore trade slipped 0.1%. The Singapore dollar also traded flat.

In contrast, the Australian dollar strengthened, with the AUD/USD pair gaining 0.3% to reach a one-month high after Australia posted stronger-than-expected third-quarter GDP growth. Although quarterly growth came in at 0.4%—slightly below forecasts—annual growth accelerated to 2.1%, the fastest pace in two years. Rising inflationary pressures combined with resilient economic performance may prompt the Reserve Bank of Australia to keep interest rates steady for longer.