Dollar Strengthens, Yen Weighed Down by Intervention Risks
The US dollar strengthened modestly on Tuesday, while Asian currencies traded mixed and the Japanese yen weakened further as investors assessed the Bank of Japan's recent policy shift and the prospect of renewed currency intervention.
The dollar index was around 100.49, up 0.1%, after gaining more than 1% last week following the Federal Reserve's hawkish rate hike.
The yen remains under pressure as intervention risks linger, with DBS FX & Credit Strategist Chang Wei Liang stating that it is significantly undervalued despite earlier joint US-Japan interventions and the BOJ's 25-basis-point rate hike in September.
Oil prices remain a major variable for import-dependent currencies, particularly the Indian rupee, as investors assess the effect of higher energy costs on the country's import bill and the possibility of further rate increases by the Reserve Bank of India.