Markets are positioning for a potentially hawkish hold, especially in the face of energy-driven increases in inflation due to the Middle East war

Most Asian currencies moved in a tight range on Wednesday as persistent concerns over the U.S.-Israel war on Iran and anticipation of several central bank meetings kept traders to the sidelines.

The yen logged some strength after recovering from its weakest level in 19 months, with the Bank of Japan set to decide on rates on Thursday. Mildly positive trade data also aided the battered yen.

The yen’s USD/JPY pair moved little on Wednesday, although it did drop from levels last seen in mid-2024.

The yen was supported by continued warnings of potential intervention by Japanese government officials, especially as high oil prices battered the currency.

Focus this week is on the conclusion of a BOJ meeting on Thursday, where the central bank is widely expected to leave rates unchanged.

But markets are positioning for a potentially hawkish hold, especially in the face of energy-driven increases in inflation due to the Middle East war.

Mildly positive trade data offered little support to the yen, even as Japan clocked an unexpected trade surplus in February on sustained increases in exports.

Caution over the Iran war and anticipation of a barrage of central bank meetings left most Asian currencies trading rangebound. The yuan’s USD/CNY pair declined 0.1%, while the Singapore dollar’s USD/SGD pair advanced 0.1%.

The Indian rupee’s USD/INR pair was flat around 92.4 rupees, remaining close to record highs as a spike in oil prices battered the Indian currency.

The Australian dollar’s AUD/USD pair gained slightly after an interest rate hike by the Reserve Bank of Australia on Tuesday. The Taiwan dollar’s USD/TWD pair was flat, as was the won’s USD/KRW pair.