Most Asian currencies and the dollar traded sideways on Wednesday as investors assessed the fallout from a U.S. government shutdown, while the Indian rupee gained marginally after the country’s central bank left interest rates unchanged as expected.
The US Dollar Index, which measures the greenback against a basket of major currencies, traded flat in Asia hours. US Dollar Index Futures were also unchanged as of 05:00 GMT.
RBI holds interest rates steady as expected
The Reserve Bank of India held its key repo rate steady at 5.50% on Wednesday, in line with expectations, maintaining a neutral policy stance amid mixed growth and inflation signals.
The six-member Monetary Policy Committee voted unanimously to keep rates unchanged, citing a more benign inflation outlook and moderating price pressures supported by recent tax cuts.
RBI Governor Sanjay Malhotra said the central bank would closely monitor global and domestic developments before altering policy.
The Indian rupee’s USD/INR edged 0.2% lower after the decision, but still hovered near record highs.
The RBI has intervened heavily in recent weeks to stem currency volatility, but global uncertainty continues to weigh on the rupee. A surprise cut could exacerbate pressure on the currency.
US govt shuts down partially
The U.S. federal government entered a partial shutdown at 00:00 ET (04:00 GMT) after lawmakers failed to agree on a stopgap funding measure.
The Senate rejected a Republican-backed plan in a 55–45 vote late on Tuesday, which fell short of the 60 votes required to overcome a filibuster. That left Washington with no agreement to keep the government funded.
President Donald Trump defended the shutdown, saying it would enable his administration to take “irreversible” actions, including closing federal programs and implementing permanent cuts.
He suggested that the pause in government operations could be used to reduce spending on long-standing Democratic initiatives and hinted at large-scale layoffs, remarks that unsettled investors already worried about the U.S. labour market.
The shutdown has raised questions about the release of key U.S. economic data, including the closely watched non-farm payrolls report due later this week.
Asia FX flat; India rate decision ahead
Asian currencies traded in tight ranges, with traders reluctant to take positions amid uncertainty in the U.S.
The Japanese yen’s USD/JPY pair traded largely flat on Wednesday, while the Singapore dollar’s USD/SGD edged up 0.1%.
The South Korean won’s USD/KRW pair gained 0.3%, while the Chinese yuan’s onshore USD/CNY pair was largely unchanged.
The Australian dollar’s AUD/USD pair fell 0.3%, reversing gains recorded in the previous session after the Reserve Bank of Australia left interest rates unchanged at 3.6% as expected.
Source :
https://www.investing.com/news/forex-news/asia-fx-dollar-steady-as-us-govt-shutdown-begins-rbi-decision-awaited-4265116
