Most Asian currencies slipped on Tuesday as the U.S. dollar steadied following overnight gains, with traders focusing on fresh sanctions against Iran and developments in U.S. Treasury yields.
The U.S. Dollar Index rose 0.1% to 98.95 by 04:50 GMT, after gaining 0.2% in the previous session. The Japanese yen strengthened 0.2% against the dollar to 159.35, extending its recent gains. The Chinese yuan traded flat, while the Singapore dollar and South Korean won were little changed. The Indian rupee and Australian dollar showed muted movement.
The greenback’s modest rebound followed the announcement of expanded U.S. sanctions targeting Iran, which Washington said were aimed at curbing Tehran’s financial activities. U.S. Treasury Secretary Scott Bessent warned that countries and businesses continuing to trade with Iran risked exclusion from the dollar-based financial system. Iran responded by vowing to retaliate against the measures.
U.S. Treasury yields remained a key driver, with the market eyeing the potential deployment of cash from the $940 billion U.S. General Account to fund debt purchases. The Treasury also plans to double quarterly buybacks of 10- to 30-year securities to $4 billion per operation starting September 10, a move that could influence longer-dated yields.
Elsewhere, the Reserve Bank of Australia’s August meeting minutes revealed policymakers were divided over whether inflation risks warranted another interest-rate hike. The central bank’s stance remains a focal point for regional markets, particularly as inflation dynamics continue to shape policy expectations.
Investors will also watch for the release of the July personal consumption expenditures price index on Wednesday and Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole symposium on Friday, both of which could further influence market sentiment and currency movements.
