Broader Asian currencies moved in a tight range on Monday

Most Asian currencies moved in a tight range on Monday as focus remained on a potential escalation in the U.S.-Israel war on Iran, with most currencies nursing recent losses.

The yen fared better than its peers after Bank of Japan Governor Kazuo Ueda struck a somewhat hawkish tone in a parliamentary address, while top officials warned of potential moves against speculation in currency markets.

The yen’s USD/JPY pair dropped 0.4%, falling back below the 160-yen level as the yen recovered from its weakest levels since July 2024.

The yen was aided by intervention threats from Japanese officials. Top currency diplomat Atsushi Mimura said on Monday that authorities may need to take “decisive steps” if speculation against the yen persists.

His comments were the strongest yet verbal warning on potential currency market intervention in Japan. USDJPY testing the 160-yen level has invited intervention in the past two years.

Separately, BOJ Governor Kazuo Ueda told parliament that the central bank would closely watch yen moves and their effects on import-driven inflation.

His comments suggested that the BOJ could hike interest rates in the coming months to strengthen the yen and offset higher inflation from imports, especially amid rising energy prices.

Broader Asian currencies moved in a tight range on Monday. The yuan’s USD/CNY pair was flat, while the won’s USDKRW pair added 0.5%.

In related news, the dollar index and dollar index futures were flat in Asian trade after rebounding back above the 100-point level last week, as rising oil prices due to the Iran war saw markets further pare back expectations of interest rate cuts by the U.S. central bank.