Asian Currencies Steady in Thin Lunar New Year Trade; NZ Dollar Drops After RBNZ Holds Rates

Asian currencies were largely unchanged on Wednesday as subdued Lunar New Year trading kept market activity light across the region. With major financial centers such as China and Hong Kong closed for the holiday, foreign exchange markets saw limited volatility despite ongoing U.S. dollar consolidation ahead of key economic data releases.

The U.S. Dollar Index rose 0.1% after modest overnight gains, while U.S. Dollar Index futures also edged 0.1% higher in early GMT trading. Investors remained cautious as they awaited the Federal Reserve’s January meeting minutes and the upcoming U.S. personal consumption expenditures (PCE) price index report, a key inflation indicator that could shape expectations for future interest rate policy.

The New Zealand dollar was the biggest mover in the region. The NZD/USD pair dropped nearly 1% after the Reserve Bank of New Zealand (RBNZ) kept its official cash rate unchanged at 2.25%. The central bank reiterated its accommodative monetary policy stance, signaling that interest rates would remain supportive as inflation gradually returns to its 2% midpoint target. The RBNZ noted that spare economic capacity and moderate wage growth are likely to keep price pressures contained over the next year. Following the announcement, markets scaled back expectations for near-term rate hikes, pushing tightening bets toward late 2026 and weighing on the kiwi dollar.

In Japan, fresh trade data showed exports surged 16.8% year-on-year in January, while imports declined, resulting in a narrower-than-expected trade deficit of 1.15 trillion yen. Despite the strong export performance, the USD/JPY pair edged 0.1% higher.

Elsewhere in Asia, currency movements were muted. The South Korean won traded flat against the dollar, the Singapore dollar gained 0.1%, and the offshore Chinese yuan remained steady. The Indian rupee posted marginal gains, while the Australian dollar slipped 0.2% against the greenback as traders positioned ahead of critical U.S. economic signals.