Asian FX Declines Amid Mixed Iran War Signals; Japan Core CPI Falls Below BOJ Target

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2026-03-24 03:59:38

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Investing.com - On Tuesday, most Asian currencies weakened as investors weighed conflicting signals from the Middle East conflict, while also paying attention to the dollar rebound and Japan’s soft inflation data.

The dollar strengthened after falling in the previous trading session, with the US dollar index rising 0.5%.

As of 23:20 Eastern Time (03:20 Beijing Time), the dollar index futures also increased by 0.5%.

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Iran denies US claims of ending conflict negotiations

Previously, U.S. President Donald Trump stated that Washington had conducted “very good and productive” talks with Iran and would pause strikes on the country’s energy infrastructure, causing the dollar to weaken.

However, Iran denied any such negotiations, contradicting the US statements, which clouds the prospects of de-escalation.

Regional currencies generally weakened, with the Korean won (USD/KRW) jumping 1%.

The Indian rupee (USD/INR) rose 0.4% to 93.54 rupees, remaining below the previous day’s high of 94.12 rupees.

The onshore Chinese yuan (USD/CNY) edged up 0.2%, while the Singapore dollar (USD/SGD) increased 0.3%.

The Australian dollar (AUD/USD) fell 0.6%.

The Japanese yen (USD/JPY) declined slightly by 0.1%.

Japan’s core inflation falls below central bank target

Data shows Japan’s inflation cooled more than expected, with core price growth falling below the central bank’s target, complicating policy outlooks.

Meanwhile, business activity also lost momentum, with the March manufacturing PMI preliminary reading dropping from 53.0 to 51.4, indicating a slowdown in factory expansion.

Weak data reinforce expectations that the Bank of Japan may be cautious about further tightening policies.

ING analysts stated in a report: “Nevertheless, the Bank of Japan may ignore recent inflation slowdown and focus on upside risks to prices.”

“Healthy wage negotiations and better-than-expected PMI data increase the likelihood of a rate hike in April. However, the timing may change depending on the Middle East situation,” they added.

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