Most Asian currencies strengthened on Thursday as Asia FX firms on renewed hopes for a Russia-Ukraine peace treaty. U.S. President Donald Trump’s comments on potential negotiations boosted risk appetite, even as traders remained cautious about persistent U.S. inflation.
The dollar weakened despite stronger-than-expected consumer price index (CPI) data, which suggested interest rates could remain high for longer. The yen saw little support from upbeat producer price index (PPI) figures, with USD/JPY stabilizing after overnight volatility.
Meanwhile, the Chinese yuan was little changed, with USD/CNY hovering around 7.3. Reports suggested Beijing had proposed hosting a peace summit to mediate Russia-Ukraine talks.
Trump revealed he had individual discussions with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy, who both expressed interest in peace. This followed U.S. Defense Secretary Pete Hegseth’s statement that Ukraine would halt NATO membership ambitions and claims on Russian-occupied territory. The development raised hopes for an end to the three-year conflict that has disrupted global markets.
Market optimism lifted Asian stocks, with the Australian dollar gaining 0.1% against the U.S. dollar. The South Korean won also rose, with USD/KRW falling 0.2%, while USD/SGD dropped 0.3%. The Indian rupee extended gains as the Reserve Bank of India intervened to stabilize the currency.
Despite inflation concerns, improved risk sentiment weighed on the dollar, causing the dollar index (DXY) to drop 0.4%. Fed Chair Jerome Powell’s testimony suggested high rates would persist, supporting the greenback in the long term. However, Trump’s tariff plans could further impact currency markets.
As Asia FX firms, investors are closely watching central bank policies and geopolitical developments for future market trends. The region’s economic stability remains a key focus, influencing trading decisions and investment strategies.
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Asia FX firms as risk appetite rises on Russia-Ukraine peace hopes, countering concerns over sticky U.S. inflation.
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