Asian currencies weakened early Tuesday as the U.S. dollar advanced, driven by geopolitical tensions and expectations around U.S. Treasury operations. The ICE U.S. Dollar Index climbed 0.1% to 98.95 by 1:50 AM Brasília time, following a 0.2% gain the prior session.
The dollar’s gains were most pronounced against the Japanese yen, which fell 0.2% to 159.35, extending its recent upward trend. The South Korean won also slipped 0.1% against the dollar, while the Chinese yuan and Singapore dollar held steady. The Australian dollar and Indian rupee showed little movement.
U.S. Treasury Secretary Scott Bessent announced expanded sanctions targeting Iran, warning that entities and countries continuing to engage with Tehran risk exclusion from the dollar-based financial system. Iran responded by vowing retaliation, adding to market caution.
In U.S. debt markets, the Treasury’s General Account holds approximately $940 billion in liquidity, a figure that could support operations to stabilize longer-term borrowing costs. The Treasury plans to double its quarterly repurchases of securities maturing between 10 and 30 years to $4 billion per operation, beginning September 10.
Federal Reserve Chairman Kevin Warsh is scheduled to speak at the Jackson Hole symposium on Friday, with markets closely watching for signals on monetary policy direction. The July Personal Consumption Expenditures price index, the Fed’s preferred inflation gauge, is due for release on Wednesday.
The Reserve Bank of Australia’s August meeting minutes revealed divisions among officials over inflation risks and the potential for further interest rate hikes, underscoring uncertainty in global policy outlooks.
