Asian Currencies Rise as Yen Extends Rally, Dollar Pressured

Asian currencies strengthened on Monday as the Japanese yen continued its rally, with the South Korean won reaching its strongest level in nearly two years.

The U.S. dollar remained under pressure despite rising bets on a September Federal Reserve rate hike, as investors reassessed the outlook for global interest rates and stayed alert to renewed Middle East tensions and elevated oil prices.

The yen's rally has been driven by expectations of a 25-basis-point Bank of Japan rate hike on September 18, as well as concerns about further intervention in the currency market.

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.