Most Asian currencies showed little movement on Wednesday amid light trading during the Lunar New Year holiday, while the New Zealand dollar weakened after the country’s central bank kept interest rates unchanged and signaled a continued accommodative stance.
Market activity across the region was thin, with major financial centers such as China and Hong Kong closed for the holiday, limiting volatility in Asian foreign exchange markets even as the dollar consolidated ahead of important U.S. economic releases.
The US Dollar Index inched up 0.1% following modest gains overnight, with futures also trading 0.1% higher as of 04:01 GMT.
New Zealand Dollar Slides After RBNZ Decision
The NZD/USD pair dropped nearly 1% after the Reserve Bank of New Zealand maintained its official cash rate at 2.25%, emphasizing that policy would remain supportive as inflation returns to the target range.
The central bank projects price growth to gradually approach the 2% midpoint over the next year, citing underutilized capacity and moderate wage pressures.
This stance has reduced expectations for imminent rate hikes, pushing markets to price in possible tightening further into late 2026 and putting downward pressure on the kiwi.
“Overall, the dovish guidance shifts the balance of risks away from an early start to tightening,” analysts at Westpac noted. They added that while further easing is unlikely, the RBNZ is expected to start raising the OCR from the December 2026 meeting.
Japan Reports Strong Export Growth; Fed Minutes Awaited
Japan’s trade figures for January showed exports surged 16.8% year-on-year, while imports declined, resulting in a smaller-than-expected trade deficit of 1.15 trillion yen.
The USD/JPY pair nudged up 0.1% in response.
Across the region, most currencies traded within narrow ranges as investors awaited the U.S. Federal Reserve’s January meeting minutes later Wednesday, as well as the personal consumption expenditures (PCE) price index on Friday, both seen as key indicators of future global interest rate trends.
The South Korean won remained steady against the dollar, while the Singapore dollar edged up 0.1%. The Chinese yuan traded largely unchanged in offshore markets, and the Indian rupee rose slightly. Meanwhile, the Australian dollar fell 0.2% against the U.S. dollar.
Frequently Asked Questions
Why were most Asian currencies largely unchanged on Wednesday?
Trading volumes were light due to the Lunar New Year holiday, with major markets like China and Hong Kong closed, which limited movement in Asian foreign exchange markets.
What caused the New Zealand dollar to decline?
The NZD/USD pair fell nearly 1% after the Reserve Bank of New Zealand kept its official cash rate at 2.25% and signaled that monetary policy would remain supportive, easing expectations for near-term rate hikes.
How did Japan’s trade data affect the yen?
January trade data showed a 16.8% rise in exports and a smaller-than-expected trade deficit, leading the USD/JPY pair to edge up 0.1%.
What are investors watching for in the coming U.S. economic releases?
Market participants are awaiting the Federal Reserve’s January meeting minutes and the U.S. personal consumption expenditures (PCE) price index, both of which will provide insight into the future direction of interest rates.
How did other regional currencies perform?
The South Korean won remained steady, the Singapore dollar gained 0.1%, the Chinese yuan traded largely unchanged offshore, the Indian rupee rose slightly, and the Australian dollar fell 0.2% against the U.S. dollar.
