Investing.com– Most Asian currencies weakened on Friday with the Japanese yen recovering slightly from a five-month low as strong inflation data only offset a dovish outlook for the Bank of Japan.
Regional currencies were squeezed by a broad push into the dollar, which hit a one-year high after the Federal Reserve signaled a slower pace of rate cuts in 2025. .
The and rose slightly in Asian trade, and were at their strongest levels since November 2023. Focus is now on key data due later on Friday for more news on interest rates .
The Chinese yuan weakened to a more than one-year low after Beijing left its key lending rate unchanged.
Yen rises from 5-mth low on strong CPI; BOJ outlook dovish
The Japanese yen was among the best performers on Friday, with the pair falling 0.2% as inflation data for November read slightly stronger than expected.
But the yen nursed a fall to its weakest level in five months on Thursday, with USDJPY rising to 157.93 yen – its highest level since late July.
While strong CPI data made the case for an eventual rate hike by the Bank of Japan, comments from Governor Kazuo Ueda on Thursday suggested a hike will come later rather than sooner in 2025.
The central bank said inflation will continue to rise. But Ueda's comments about watching labor wage negotiations in the spring suggested that a raise might not come until at least March.
Recent weakness in the yen fueled renewed speculation about government intervention, after ministers issued verbal warnings about yen weakness.
Chinese yuan at 1-year low; PBOC leaves key lending rate unchanged
The Chinese yuan pair rose 0.2%, hitting its highest level since November 2023.
The People's Bank of China left its benchmark unchanged on Friday, as widely expected, with the central bank seen as having little room to cut rates further amid the yuan's persistent weakness.
Looser monetary policy has also provided limited support to the Chinese economy over the past year, with Beijing expected to increase fiscal spending in the coming year to boost growth.
Broader Asian currencies were mostly weaker on Friday, and were nursing big losses this week as traders remained biased towards the dollar. The Australian dollar pair fell 0.2% and remained at a two-year low, while the South Korean won pair rose 0.4% and was near its highest point in nearly 15 years.
The Singapore dollar pair was flat, while the Indian rupee pair stood firm after hitting a high above 85 rupees earlier in the week.
