The yen has strengthened, benefiting from its status as a safe-haven asset amid global uncertainties

Asian currencies remained muted on Friday, extending a week of subdued performance amid concerns over the ongoing U.S. government shutdown, while the Japanese yen was set for a sharp weekly gain on safe-haven demand.

The South Korean won’s USD/KRW pair traded flat, while the Singapore dollar’s USD/SGD edged up 0.1%.

The Chinese yuan’s offshore pair USD/CNH rose 0.1%. Mainland markets were closed for public holidays.

The Australian dollar’s AUD/USD pair was largely steady. The Reserve Bank of Australia left interest rates unchanged this week.

The Indian rupee’s USD/INR pair gained 0.1%, not far from record highs hit last month. The Reserve Bank of India left key interest rates unchanged at 5.5% on Wednesday.

The yen, however, has strengthened, benefiting from its status as a safe-haven asset amid global uncertainties.

We continue to favour a lower USD/JPY in this environment, especially as EUR faces more technical resistance, ING analysts said in a note.

So far, the move lower in USD/JPY has been driven by rates and equities, with no compression yet in the JPY risk premium – something we expect as haven demand builds, they added.

The Japanese yen’s USD/JPY pair was set to decline 1.2% for the week.

However, the pair rose 0.3% on Friday as Bank of Japan Governor Kazuo Ueda flagged caution over the economy, suggesting that the central bank would not raise interest rates immediately.

The US Dollar Index, which measures the dollar against a range of major currencies, traded flat in Asia hours. US Dollar Index Futures were also unchanged as of 05:25 GMT.

While the U.S. dollar remains under pressure due to expectations of central bank rate easing, most Asian currencies have been largely muted this week.