Asia Currencies Rally as Yen Strengthens, Dollar Faces Fiscal Pressures

Asian currencies were broadly firmer on Monday, led by the South Korean won's surge to its strongest level in nearly two years. The Japanese yen extended its strongest weekly rally since late July, with the pair trading at 156.14 and leaving the yen near its strongest level in more than a month.

The yen's rally has been driven by expectations of a Bank of Japan rate hike on September 18, which could be followed by faster increases. Japan's top currency diplomat Atsushi Mimura said he remains alert to exchange-rate movements and is in constant contact with U.S. authorities, keeping the prospect of another yen-buying intervention in focus.

The won rose 0.2% to 1,346.98, although it earlier touched its best level since October 2024 at 1,334.70. A rally in Korean semiconductor shares led by SK Hynix and Samsung supported the currency, while foreign investors bought more than 800 billion won of Korean shares on the Kosdaq.