Asian FX Gains on US-India Trade Deal, RBA Watch

Asian currencies experienced varied movements this week, largely influenced by a newly confirmed trade deal between the US and India and anticipation surrounding the Reserve Bank of Australia’s (RBA) policy decision. The Indian Rupee (INR) surged to a 2.5-week high against the US Dollar (USD), with the USD/INR pair falling to near 90.128, following the agreement which lowers US tariffs on Indian goods from 25% to 18%. This deal is expected to boost Indian exports and trigger a rally in domestic markets, contingent on India continuing to reduce oil purchases from Russia. The Australian Dollar (AUD) also strengthened ahead of the RBA meeting, with expectations of a rate hike reinforcing a tightening cycle despite a decline in building permits. Conversely, the Japanese Yen faced pressure from a rebounding dollar. The Chinese Yuan stood out, reaching its strongest level since mid-2023 due to strong fixings. South Korea’s CPI growth came in below expectations at 2% in January. Market sentiment remains cautious, with traders monitoring the specifics of the US-India trade deal and the RBA’s policy stance.