Anna 
On Monday, most Asian currencies experienced depreciation, with the Japanese yen reaching new 34-year lows, while heightened demand for safe-haven assets, driven by an Iranian strike on Israel, propelled the dollar to more than five-month highs.
The dollar’s strength was further reinforced by the expectation of prolonged high U.S. interest rates following robust inflation data and hawkish signals from the Federal Reserve last week.
China’s weak economic indicators also contributed to the subdued sentiment in Asia, as March data revealed a worsening disinflationary trend alongside export and import figures falling short of expectations.
The Japanese yen, typically sought after in times of market uncertainty, notably weakened against the dollar, with the USDJPY pair surging to a 34-year high of 153.77. Despite its traditional safe-haven status, the yen ceded ground to gold and the dollar amid risk-averse trading sentiments.
The yen’s depreciation raised concerns among traders regarding potential intervention by the Japanese government in currency markets, particularly following recent warnings from government officials. Levels above USDJPY 153 have historically prompted significant government intervention, leading to sharp pullbacks in the currency pair.
Investors also awaited Japanese inflation data later in the week for further insights into the country’s economic outlook.
Meanwhile, the dollar index and dollar index futures stabilized in Asian trading after reaching 5-½ month highs on Friday. Safe-haven demand for the dollar surged following Iran’s missile and drone strike on Israel, although the actual damage was minimal, and Iran indicated the conclusion of its attack.
Furthermore, declining expectations of Fed rate cuts in the first half of 2024, coupled with strong March inflation readings, bolstered the dollar’s appeal.
The weak risk appetite and expectations of sustained high U.S. interest rates weighed on most Asian currencies. The Chinese yuan’s USDCNY pair remained steady after the People’s Bank of China kept medium-term lending rates unchanged.
The Australian dollar’s AUDUSD pair recovered slightly from a recent dip to two-month lows, while the South Korean won’s USDKRW pair also edged higher.
However, the Indian rupee remained fragile, with the USDINR pair hovering near record highs, while the Singapore dollar’s USDSGD pair exhibited sideways movement.
