The Brazilian real rose 0.21% to 4.9 per USD, reaching its strongest level in 11 weeks. This move is driven by the reopening of the Strait of Hormuz, a major breakthrough that has sparked global optimism and caused the US dollar to drop (DXY -0.29%). The currency has extended its sharp downward trend seen since late March, as the fall in the dollar effectively offsets the pressure from an 12% collapse in oil prices.
As war fears fade and global markets look for a strong finish to the week, the real continues to recover, heading back toward the levels seen in early February.

Brazilian Real Hits 11-Week High on Hormuz Reopening

The euro strengthened above $1.18, reaching its highest level since before the conflict with Iran began, supported by broad dollar weakness as investors welcomed news of the temporary reopening of the Strait of Hormuz, which helped ease near-term inflation concerns. Iran’s foreign minister confirmed that the strait is fully open to all commercial vessels for the duration of the 10-day ceasefire. In response, oil prices tumbled more than 10%, alleviating some pressure on inflation. The euro is up 2.7% on the week, its biggest gain in a year, and is on track for a third consecutive weekly advance, as traders increasingly bet the ECB may raise interest rates this year. Earlier in the week, ECB President Lagarde acknowledged that elevated energy costs have pushed the eurozone away from its baseline economic path, but she refrained from signaling any imminent rate increases.

Euro Gains for 3rd Week

The Mexican peso strengthened by 0.4% to 17.17 per USD, reaching its highest level since February. This appreciation was fueled by a 0.4% drop in the DXY to 97.and increased risk appetite after oil prices tumbled more than 10% on reports of potential U.S.-Iran peace talks in Pakistan. The reopening of the Strait of Hormuz and a 10-day ceasefire between Israel and Lebanon have further eased global trade concerns, benefiting high-yield currencies like the peso. Mexico’s resilience remains supported by a benchmark rate of 6.75%, which continues to attract investors as global tensions subside.

Mexican Peso Hits February Highs

The Canadian dollar depreciated by 0.3% toward 1.36 against the USD on Friday, as the currency reacted to a sharp 12% dive in oil prices to $82. This drop followed news that the Strait of Hormuz is "completely open" to commercial vessels during a ceasefire between Israel and Lebanon, which has quickly reduced the fear of a global energy crisis. Because Canada is a major oil exporter, the lower prices mean less income for the country, putting pressure on its currency. At the same time, the de-escalation of the conflict has calmed inflation worries, leading investors to bet that the Bank of Canada will cut interest rates sooner than expected. Although the US Dollar Index (DXY) also fell to 97.7, the combination of cheaper oil and the shift toward lower interest rates has tempered the recent demand for the Canadian currency.

Canadian Dollar Weakens as Oil Prices Plunge on Peace Hopes

The Japanese Yen touched 157.85 against the USD, the highest since March 2026. Over the past 4 weeks, US Dollar Japanese Yen lost 1.24%, and in the last 12 months, it increased 11.05%.

Japanese Yen Hits 4-week High

The dollar index fell about 0.5% to below 98 on Friday, marking its lowest level since the conflict with Iran began, as news of the temporary reopening of the Strait of Hormuz helped ease near-term inflation concerns. Iran’s Foreign Minister said that the strait is now fully open to all commercial vessels for the duration of the 10-day ceasefire. In response, oil prices tumbled more than 10%, prompting traders to ramp up bets on Federal Reserve rate cuts this year. Markets are now pricing in roughly a 50–50 chance of a 25-basis-point rate cut by year-end, up from around a 30% probability on Thursday. This still compares with earlier expectations of two rate cuts before the conflict escalated. The greenback weakened broadly, with the sharpest declines against the Swiss franc, Australian dollar, Japanese yen, and the euro. For the week, the dollar index is down about 0.5%, on track for a third consecutive weekly decline.

Dollar Back to February Lows

The Canadian Dollar touched 1.37 against the USD, the highest since March 2026. Over the past 4 weeks, US Dollar Canadian Dollar lost 0.44%, and in the last 12 months, it decreased 1.25%.

Canadian Dollar Hits 4-week High

The Indian rupee strengthened to around 92.7 per dollar, extending gains from the previous session, supported by measures from the Reserve Bank of India to curb oil-related dollar demand. The central bank reportedly directed state-run oil importers to route their foreign exchange needs through a special credit facility via State Bank of India instead of the open market, reducing immediate USD demand and easing pressure on the rupee, given India’s reliance on crude oil imports. Broader measures, including tighter FX position limits for banks and restrictions on offshore-linked hedging activity, also helped curb speculative pressure and support the currency. Additionally, foreign investors turned net buyers in Indian equities, with inflows of around INR 3.8 billion helping underpin sentiment. Meanwhile, broader sentiment remained uneven, with elevated crude prices and ongoing geopolitical uncertainty in the Middle East continuing to weigh on risk appetite.

Indian Rupee Extends Gains on RBI Measures

The South Korean won eased to around 1,480 per dollar, retreating from its strongest level since March, as foreign equity outflows and cautious global risk sentiment weighed on the currency. South Korea recorded renewed foreign selling of KRW 376.6 billion in local equities, which offset recent stabilisation after a sharp $23.8 billion outflow in March, reinforcing near-term dollar demand and limiting further gains. At the same time, geopolitical uncertainty in the Middle East lingered, with US–Iran negotiations still ongoing and no firm agreement in place, while elevated oil prices continued to pressure South Korea’s economy given its heavy reliance on energy imports. Moreover, domestic sentiment softened further, with consumer confidence falling to its lowest since May 2025, while both manufacturing and financial conditions remained subdued, highlighting cautious investor sentiment and leaving limited support for capital inflows.

South Korean Won Eases from Over 1-Month High

The Indonesian rupiah slid to a fresh low of around IDR 17,180 per dollar on Friday, extending its recent fall despite a weaker U.S. dollar index amid easing U.S.–Iran tensions that reduced haven demand. The local currency stayed under pressure, with markets largely shrugging off central bank assurances that all monetary tools are ready to defend the rupiah in a measured and timely manner. Persistent capital outflows, elevated oil prices, fragile domestic fundamentals, and seasonal dividend repatriation continued to weigh on sentiment ahead of next week’s policy meeting. Bank Indonesia held its key rate at 4.75% in March for a sixth straight time, after a total 150bp cut since September 2024, while forex reserves fell to a near two-year low. The rupiah is on track for a third straight weekly loss, due to concerns over fiscal risks and growth after the IMF cut Indonesia’s 2026 growth forecast slightly. Inflation risks also build, though March CPI stayed within the central bank’s target.

Rupiah Under Strains, Poised for Third Weekly Drop

The Japanese yen weakened past 159 per dollar on Friday, giving back gains from earlier in the week after Bank of Japan Governor Kazuo Ueda offered no clear guidance on interest rates ahead of the central bank’s upcoming policy meeting. Ueda highlighted the difficult balancing act facing policymakers, citing upside risks to inflation alongside downside risks to economic growth. Ahead of previous rate hikes, Ueda had signaled policy moves more explicitly to prepare markets, and investors had been looking for a similar signal. Still, the BOJ is widely expected to raise its inflation forecasts at this month’s meeting, reflecting elevated energy costs. Earlier in the week, the yen had strengthened after Finance Minister Satsuki Katayama said she held close discussions on foreign exchange policy with US Treasury Secretary Scott Bessent, adding that authorities remain ready to intervene decisively if needed.

Yen Weakens After Ueda Remarks

The New Zealand dollar fell to around $0.588 as softer food inflation and moderating consumer spending reinforced expectations that the Reserve Bank of New Zealand may keep interest rates unchanged for now. Food prices, which account for nearly 19% of the CPI basket, rose 3.4% year-on-year in March, easing from a 4.5% increase in February and marking the lowest level in just over a year. Meanwhile, core electronic card spending increased 0.7% month-on-month, slowing from the previous 1.4% rise. Together, the data pointed to cooling inflation and spending, reducing the urgency for immediate policy tightening. However, while price pressures are easing in some categories, underlying inflation remains a key concern, and the RBNZ has recently signaled it is prepared to hike rates should core inflation accelerates. Despite the fall, the kiwi remains close to an over five-week high, supported by improved risk sentiment amid hopes for a negotiated end to the Middle East war.

New Zealand Dollar Declines

The dollar index stabilized above 98 on Friday but remained on track for a third consecutive weekly decline, as improving prospects for an end to the US-Iran conflict reduced safe-haven demand and eased inflation concerns tied to energy markets. In the latest developments, President Donald Trump expressed confidence that the war with Iran will end soon, claiming Tehran had agreed to terms including abandoning nuclear ambitions and reopening the Strait of Hormuz. Trump also announced a 10-day ceasefire between Israel and Lebanon, which could support further US-Iran negotiations. Oil prices have continued to retreat, helping to temper inflation expectations and reducing bets that the Federal Reserve will need to tighten policy. Fed Bank of New York President John Williams said heightened uncertainty should limit forward guidance on the policy path, although his baseline outlook still includes rate cuts over the longer term.

Dollar Heads for Third Weekly Loss

The Australian dollar held above $0.71, sitting near its highest level since May 2022 and headed for its third straight weekly gain, supported by improving risk sentiment amid hopes for a potential de-escalation in the Middle East war. US President Trump continued to signal progress toward a deal with Iran, though the key details remain unconfirmed and the Strait of Hormuz continues to face disruptions, keeping energy prices volatile. Still, the Aussie has rebounded sharply amid the optimism, up over 5% from late-March lows triggered by the geopolitical tensions. Meanwhile, Australia’s labor market remained resilient in March, reinforcing bets that the Reserve Bank may continue tightening policy. Markets currently price in a 70% odds of a third consecutive rate hike in May, with upcoming Q1 inflation data seen as critical for the outlook. Adding support, solid first-quarter growth in China, driven by exports and policy support, has bolstered demand prospects for Australian commodities.

Aussie Dollar Sits at 4-Year Top

The dollar index edged up above 98 on Thursday but remained near the pre-war lows seen in the previous session, as investors grew increasingly optimistic that the US and Iran could soon reach an agreement to end the conflict and reopen the Strait of Hormuz, reducing safe-haven demand. US President Trump said the seven-week conflict was “close to over,” while the White House expressed confidence in a potential deal, noting that additional in-person talks could take place in Pakistan. However, Iranian officials signaled that significant differences remain, particularly regarding nuclear issues. Meanwhile, softer crude prices in recent days have helped ease inflation concerns. The Federal Reserve is widely expected to keep interest rates on hold throughout the year, a view reinforced by recent comments from several policymakers, including Federal Reserve Bank of New York President John Williams.

Dollar Near Pre-War Levels

The Swiss franc hovered around 0.78 per USD, near its highest since July 2011, as optimism over a permanent truce between the US and Iran has diminished safe-haven demand for the greenback. Easing geopolitical concerns reduced fears of a prolonged energy and inflationary shock, while also dampening expectations of a more hawkish stance by major central banks. Meanwhile, the SNB minutes from the latest March meeting pointed to increasing uncertainty over Switzerland’s economic outlook, with global developments, particularly the Middle East conflict, seen as key inflation risks. Policymakers noted that, given heightened geopolitical tensions and safe-haven flows, the SNB is likely to remain highly willing to intervene in FX markets to curb a rapid and excessive appreciation of the franc that could undermine price stability in Switzerland.

Swiss Franc Hovers at 2011-Highs

The euro hovered near $1.18, holding close to its pre-war highs, supported by broad-based dollar weakness as investors grow more optimistic that diplomatic efforts could bring an end to the US–Iran conflict. Reports indicate that both sides are considering a two-week extension of the ceasefire to allow additional time for negotiations, with a second round of talks expected in the near term. In this context, oil prices have eased from recent peaks, helping to alleviate inflationary pressures and prompting traders to scale back expectations for near-term monetary tightening by the ECB. Markets are now pricing in two 25 basis point rate hikes this year, down from three anticipated just a few weeks ago. Earlier in the week, ECB President Lagarde acknowledged that elevated energy costs have diverted the eurozone from its baseline economic trajectory, but she refrained from signaling any imminent rate increases.

Euro at Pre-War Levels

The British pound eased to around $1.356 as traders scaled back expectations for a Bank of England rate hike, supported by growing optimism that the Middle East conflict may be nearing an end. Policymakers have signaled no urgency to tighten policy, with Governor Andrew Bailey saying it is too early to assess the war’s impact, describing it as a major energy shock whose duration will shape inflation. Also, policymaker Megan Greene said markets were right to dial back aggressive rate hike expectations. The conflict is expected to weigh heavily on the UK economy, lifting borrowing costs and inflation while dampening growth prospects ahead of the April 30 policy meeting. Despite this, recent data showed strong momentum before the war, with GDP rising 0.5% in February. Sterling remains near an eight-week high and is up about 2.6% in April on hopes of a peace deal.

Sterling Eases from 8-Week High

The Indonesian rupiah remained near a record low of IDR 17,130 per dollar on Thursday, even as the U.S. dollar index hovered near a six-week low amid hopes for a Middle East truce. The local currency faced pressure from multiple headwinds, including elevated oil prices, persistent capital outflows, fragile domestic fundamentals, and seasonal dividend repatriation. These factors are likely to keep the central bank active in the market, potentially further straining forex reserves, which already fell to a three-month low in March. Meanwhile, the IMF cut Indonesia’s 2026 growth forecast to 5.0% from 5.1%, citing global uncertainty. Inflation risks are tilted to the upside, driven by volatile energy prices and rising fiscal burdens linked to several key programs, despite March CPI within the central bank’s target. Bank Indonesia is set to hold a policy meeting next week after leaving rates unchanged in March for a sixth straight time, following a total of 150bp cuts since September 2024.

Rupiah Weakness Persists Near Record Low

The Indian rupee hovered near 93.2 per dollar, pausing losses as easing geopolitical concerns provided support to the currency. Expectations that the US and Iran may extend their ceasefire by two weeks have reduced fears of further escalation, helping stabilize global financial markets. Even so, gains remained limited as sustained dollar demand from importers, particularly oil marketing companies, continued to cap appreciation. While softer crude prices provided some relief by easing concerns over India’s import bill, that effect was largely offset by hedging activity and steady demand for the greenback, keeping the currency confined to a narrow range. On the domestic front, investors weighed mixed macroeconomic signals, with India’s unemployment rate edging up to 5.1% in March from 4.9% in February, indicating a slight softening in labor market conditions. This was partly offset by a positive surprise in external trade, as the goods trade deficit narrowed sharply to $20.67 billion.

Rupee Steady on Geopolitical Relief

The offshore yuan edged higher to above 6.81 per USD, hitting its highest in more than three years as stronger-than-expected growth in China’s economy boosted sentiment. The world’s second-largest economy grew 0.5% in the first quarter from a year ago, accelerating from the 4.5% gain in the prior quarter and beating forecasts. However, signs of weakness started to emerge as the war in Iran disrupted global supply chains. March activity data showed a mixed backdrop, with industrial output rising 5.7% but slowing from earlier in the year, while retail sales increased 1.7%, missing expectations and easing from the previous period. This followed recent trade data, which highlighted a severe cooling in China’s export growth, indicating that the ongoing Middle East war may be dragging down global demand. Meantime, the US and Iran are considering extending their two-week ceasefire to allow more time for talks, even as the Strait of Hormuz remains effectively closed under a dual blockade.

Offshore Yuan Hits Over 3-Year High

AUDUSD increased to 0.72, the highest since June 2022. Over the past 4 weeks, Australian Dollar US Dollar gained 1.23%, and in the last 12 months, it increased 12.56%.

Australian Dollar Hits Near 4-year High

The Japanese yen strengthened to around 158.8 per dollar on Thursday, reversing earlier losses as Finance Minister Satsuki Katayama said she held close discussions on foreign exchange policy with US Treasury Secretary Scott Bessent, adding that authorities remain prepared to act decisively if necessary. On the monetary policy side, the IMF said the Bank of Japan could look through inflation driven by the Iran conflict, arguing that its impact on underlying price pressures is likely to remain limited and should not disrupt the central bank’s gradual tightening trajectory. The yen also drew support from softer oil prices and a weaker US dollar as optimism grew about a potential deal to end the Middle East conflict. Reports suggested Washington and Tehran are considering extending their two-week ceasefire to allow more time for negotiations, even as the Strait of Hormuz remains effectively closed under a dual blockade.

Yen Firms on Intervention Watch

The Australian dollar rose past $0.70, approaching levels not seen since June 2022, as the latest jobs data reinforced the Reserve Bank’s view that the labor market remains relatively tight. The jobless rate held steady at 4.3% in March, while employment increased by 17.9 thousand, driven entirely by full-time positions, indicating that labor demand remained resilient despite shockwaves from the Middle East conflict. This followed remarks from Deputy Governor Andrew Hauser, who said inflation is still running above target and that there is limited confidence that current interest rates are sufficiently restrictive. He added that rates may need to rise further, particularly as higher oil prices continue to fuel inflation. Market participants and economists now expect the RBA to deliver a third consecutive rate hike in May, which would bring the policy rate to 4.35% and effectively unwind last year’s easing.

Australian Dollar Climbs Toward 2022 Highs

The dollar index hovered around 98 on Thursday, lingering near six-week lows as rising expectations of a diplomatic breakthrough between the US and Iran reduced demand for the safe-haven currency. President Donald Trump said the seven-week conflict was “close to over,” while the White House expressed confidence in a potential agreement, noting that additional in-person talks were likely to take place again in Pakistan. Reports also indicated that Tehran may consider allowing vessels to transit freely via the Omani side of the Strait of Hormuz if a deal is reached to prevent renewed hostilities. The dollar was further pressured by easing energy prices, which helped calm inflation concerns and reduced expectations of further central bank tightening. The Federal Reserve is broadly expected to keep interest rates unchanged this month and potentially through the remainder of the year.

Dollar Languishes on Iran Deal Optimism

The Brazilian real strengthened 0.30% to trade around 4.99 per USD, reaching its strongest level since early March. This appreciation is supported by a retreat in the US Dollar Index (DXY) toward 98.05, increasing appetite for emerging market assets. The currency continues to benefit from a high-interest-rate environment, with the Selic rate at 14.75% providing a significant real yield against an inflation rate of 4.14%. While price stability remains a priority, the attractive carry-trade appeal and a robust trade balance—highlighted by exports growing 10.0% year-on-year to $31.60 billion in March 2026—continue to provide solid support for the real's current performance.

Brazilian Real Hits 6-Week High

The Mexican peso strengthened to around 17.27 per U.S. dollar, its highest level since late February. The appreciation was driven by broad dollar weakness and increased risk appetite, supported by optimism over diplomatic progress between the US and Iran. Despite global uncertainty, Mexico continues to attract interest, underpinned by relatively high interest rates and robust manufacturing data. Monetary policy remains a key driver, with the benchmark rate at 6.75%, comfortably exceeding the 4.59% inflation rate. Meanwhile, February exports rose 15.8% to $56.85 billion, fueled by a surge in mining and manufactured goods. This resilience is further reinforced by auto exports climbing 4.2% year-over-year in March (310,205 units)

Mexican Peso Hits 6-Week High

The Canadian dollar strengthened 0.18% to trade around 1.37, reaching its strongest level since March. This recovery was primarily driven by a broader depreciation of the US dollar, as the DXY fell toward the 98.05 level. Technically, the USDCAD has pulled back from April highs near 1.390 and is now testing key support at 1.374. The loonie's gains are also supported by solid domestic data, including a 3.6% surge in Manufacturing Sales and a 2% rise in Wholesale Sales for February. While oil prices remain a factor for the commodity-linked currency, the current trend mainly reflects the greenback's widespread weakness across global markets.

CAD Peaks at Highest Level Since March

The South African rand traded around 16.4 per USD, holding close to the highest since March 10, mainly benefiting from a subdued dollar and elevated prices of precious metals prices. This reflected renewed optimism about a potential resolution of the Middle East conflict. Mediators said they have made progress in extending the ceasefire, with the US and Iran reportedly open to a second round of talks soon. The rand has seen increased volatility since the onset of the Iran war in late February, leading to heightened uncertainty and a risk-off approach among investors. Global tensions and elevated fuel costs have clouded South Africa’s inflation outlook, increasing the risk of broader inflationary pressures in the coming months that could influence the trajectory of interest rates.

South African Rand Hovers Around 1-Month High

The dollar index hovered near 98 on Wednesday, lingering around six-week lows as investors grew more optimistic about diplomatic progress between the US and Iran, while oil prices remained below recent peaks. Financial markets have largely unwound the risk premium that built up after the conflict began in late February, as both sides move toward a second round of negotiations. President Donald Trump said the war is “very close to over,” adding that Iran appears open to a peace deal, with talks expected to resume shortly. On the monetary policy front, the Federal Reserve is widely anticipated to keep interest rates unchanged this month and likely through the year, while Chicago Fed President Austan Goolsbee warned that any rate cuts could be pushed back as far as 2027 if elevated energy prices persist.

DXY Hovers at 6-Week Low

The British pound traded just below $1.36, near its strongest level since mid-February, as traders weighed optimism over US-Iran peace talks against lingering economic risks. While mediators reported progress in extending the ceasefire and US President Donald Trump hinted at a potential breakthrough, uncertainty persists following Washington’s plan to deploy 10,000 additional troops to the region. With the Strait of Hormuz still closed, high energy costs are fueling inflation, leading markets to expect two Bank of England rate hikes this year. Attention also turns to a high-stakes meeting between UK Chancellor Rachel Reeves and US Treasury Secretary Scott Bessent at the IMF-World Bank Spring Meetings in Washington. The talks follow Trump’s latest remarks to Sky News, which escalated tensions and raised doubts about last year’s trade agreement. On Tuesday, Reeves delivered her sharpest criticism yet of Trump’s Middle East conflict, warning of its damaging economic spillover.

Sterling Holds Near Multi-Week High on Peace Hopes

The euro held just below $1.18 on Wednesday, close to its highest level since before the late-February war outbreak, amid optimism over potential progress in US-Iran peace talks. Mediators reported progress in extending the ceasefire, with both sides agreeing in principle to prolong negotiations focused on Tehran’s nuclear program, the Strait of Hormuz, and war compensation. US President Donald Trump suggested a deal could be near, though uncertainty remains after the US announced plans to deploy 10,000 more troops to the region soon. The prospect of dialogue eased oil prices below $100 per barrel and lifted risk appetite. However, inflationary pressures from elevated energy costs persist, with markets now pricing in at least two ECB rate hikes by year-end. On Tuesday, ECB President Christine Lagarde acknowledged that higher energy costs have pushed the eurozone off its baseline economic path, though she stopped short of signaling imminent rate increases.

Euro Holds Near Multi-Week High on Middle East Peace Hopes

The Russian Ruble touched 74.75 against the USD, the highest since May 2023. Over the past 4 weeks, US Dollar Russian Ruble lost 8.1%, and in the last 12 months, it decreased 9.74%.

Russian Ruble Hits 35-month High

The Indonesian rupiah hovered near a record low of IDR 17,130 per dollar on Wednesday, even as the U.S. dollar index remained at a six-week low amid easing safe-haven demand on hopes for a diplomatic resolution to the Middle East conflict. Weakness in local currency reflected persistent capital outflows and fragile domestic fundamentals, keeping sentiment subdued ahead of next week’s monetary policy meeting. In March, Bank Indonesia held its benchmark rate at 4.75% for a sixth straight meeting, following a cumulative 150bp of reduction since September 2024. While current inflation remained within the central bank’s target range, risks are tilted to the upside due to volatile oil prices and rising fiscal pressures linked to President Prabowo’s key programs. Policymakers have signaled limited room for further easing, with Governor Perry Warjiyo stressing a shift toward safeguarding stability through measured and consistent intervention in both spot and non-deliverable forward markets.

Rupiah Lingers Near Historic Low

The South Korean won strengthened to around 1,470 per dollar, remaining near its strongest level since March, amid easing oil prices and domestic policy expectations. Reports that the United States and Iran are considering further negotiations supported expectations that diplomatic channels remain open and eased concerns over Middle East supply disruptions, contributing to lower crude prices. This helped relieve imported inflation pressures in South Korea. Import price data showed a 16.1% month-on-month surge in March, the sharpest rise in nearly three decades, driven by higher oil prices and a weaker won, highlighting the scale of external cost pressures. The increase underscored Korea’s sensitivity to global energy shocks given its heavy reliance on imported crude. Bank of Korea governor nominee Shin Hyun-song signaled that persistent inflation pressures may warrant a policy response and warned against excessive won weakness, reinforcing expectations of closer FX monitoring.

South Korean Won Gains on Oil Relief and Policy Signals

The offshore yuan traded around 6.81 per dollar on Wednesday, remaining close to its highest level since March 2023, as improving expectations for China’s economic outlook and a weaker greenback supported the currency. The country’s economy is expected to grow by 4.8% year-on-year in the first quarter of 2026 despite the ongoing Middle East war, marking a modest rebound from 4.5% in the fourth quarter of 2025, which was the slowest pace since the post-pandemic reopening in 2022. The prolonged Middle East conflict has had only a limited impact on China, helped by years of efforts to strengthen energy security and reduce exposure to external shocks. Externally, the yuan has also drawn strength from a weaker US dollar, as safe-haven demand for the greenback has eased after reports that Washington and Tehran are preparing for a second round of talks in the coming days.

Offshore Yuan Remains Near 3-Year High

The Japanese yen traded around 158.9 per dollar on Wednesday after strengthening in the previous session, supported by lower oil prices and a softer US dollar amid hopes for a diplomatic resolution to the Middle East conflict. The US and Iran are reportedly preparing for a second round of peace talks before the current two-week ceasefire expires, even as tensions in the Strait of Hormuz continue to heighten global energy risks. Japan’s currency remains sensitive to the supply shock stemming from the Iran conflict, given the country’s heavy reliance on Middle East oil imports. Additional support came from speculation about potential intervention, as the yen recently approached the key 160 per dollar level, a threshold that has previously prompted Japanese authorities to step in to stabilize the currency. Meanwhile, BOJ Governor Kazuo Ueda said that policymakers must stay alert to the economic impact of the conflict, warning that higher oil prices could weigh on Japan’s growth outlook.

Japanese Yen Holds Advance

The dollar index traded near 98 on Wednesday, hovering at six-week lows as hopes for a diplomatic solution to the Middle East conflict dampened safe-haven demand for the currency. The move has nearly wiped out all the gains made since the Iran war began. The US and Iran are reportedly preparing for a second round of peace talks before the current two-week ceasefire expires, even as rising tensions in the Strait of Hormuz continue to exacerbate global energy risks. Oil prices pulled back sharply, easing concerns over inflation and potential central bank rate hikes. The Federal Reserve is now widely expected to keep rates unchanged for the remainder of the year, with Chicago Fed President Austan Goolsbee suggesting that rate cuts could be delayed until 2027 depending on how persistently high oil prices remain. Meanwhile, markets will focus on upcoming data including import and export price indexes, alongside the NY Empire State Manufacturing Index and the NAHB Housing Market Index.

Dollar Pressured by US-Iran Optimism

The South African rand edged up to trade below 16.4 per USD, as the dollar weakened and oil prices retreated amid hopes of renewed US–Iran negotiations. Further support came from rising prices of key precious metals. The US and Iran are said to be weighing a second round of talks before a temporary ceasefire agreement expires next week. The rand has seen increased volatility since the escalation of the Middle East conflict in late February, leading to heightened uncertainty and a risk-off approach among investors. The situation also underscored South Africa’s exposure as a net oil importer to higher global energy prices. This, in turn, raises the risk of broader inflationary pressures in the coming months, which could influence the path of interest rates. The South African Reserve Bank held rates at 6.75% in March, but stressed the Iran war is clouding its inflation outlook and opening the door to hikes if the price pressures persist.

South African Rand Firms

The dollar index fell to 98 on Tuesday, extending its decline to a seventh straight session and reaching its lowest level since late February before the Iran conflict began. Traders remain hopeful that a permanent ceasefire agreement between the US and Iran can be reached. Although weekend negotiations failed and President Donald Trump announced a blockade on Iranian oil shipments, he later indicated that Tehran had made contact and was open to further discussions. Expectations of a ceasefire and a possible reopening of the Strait of Hormuz weighed on oil prices, reducing pressure on inflation and lowering expectations for aggressive Federal Reserve tightening. On the data front, US producer prices rose 0.5% in March, below forecasts, while ADP figures showed the economy added 39,250 jobs in the week ending March 28, marking a fourth week of solid job growth.

Dollar Falls for 7th Session

The dollar index fell to 98 on Tuesday, marking a seventh consecutive session of losses and its lowest level since late February, before the conflict with Iran began. Traders remain hopeful that a permanent ceasefire agreement between the US and Iran can be reached. Both countries are reportedly considering another round of negotiations after weekend talks in Pakistan ended without a deal, with the aim of resuming discussions before the current two-week ceasefire expires. According to Reuters, the parties could return to Islamabad for talks later this week. Meanwhile, President Trump has initiated a US naval blockade of the Strait of Hormuz. Oil prices have eased slightly but remain elevated. Investors are also awaiting the PPI report due today for further insight into the impact of the recent oil shock on inflation, which is expected to show a sharp rise in energy prices. Money markets currently assign a 42% probability of a Fed rate cut by year-end.

AUDUSD increased to 0.71, the highest since March 2026. Over the past 4 weeks, Australian Dollar US Dollar gained 0.72%, and in the last 12 months, it increased 12.25%.

Australian Dollar Hits 4-week High

The British pound rose above $1.35, reaching its strongest level since before the late-February outbreak of war, as investors positioned for potential Middle East peace negotiations, despite the US maintaining its blockade on Iranian ports. With US and Iranian delegations possibly resuming talks in Islamabad this week after their latest round ended without progress, risk sentiment improved, sending oil prices below $100 per barrel. Yet, inflationary pressures from high energy costs are set to persist while the Strait of Hormuz remains closed, leading markets to expect a more hawkish Bank of England. Traders now price in nearly two interest rate hikes by year-end.
On the domestic front, UK like-for-like retail sales increased 3.1% in March, fueled by a 6.2% rise in food sales as consumers stocked up for the Easter holiday.

Sterling Surges Past $1.35 on Middle East Talk Hopes

The euro climbed toward $1.18, reaching its highest level since before the outbreak of war in late February, as investors grew optimistic about the potential for Middle East peace negotiations. This optimism persisted even as the US maintained its blockade of Iranian ports, creating a mixed geopolitical backdrop. Negotiating teams from the US and Iran may return to Islamabad this week, just days after their latest round of talks concluded without a breakthrough. The prospect of renewed dialogue was enough to spark a shift toward riskier assets, while oil prices retreated below $100 per barrel. However, inflationary pressures driven by elevated energy costs are likely to persist as long as the Strait of Hormuz remains closed, prompting markets to expect a more hawkish European Central Bank. Traders now price in at least two rate hikes by year-end.

Euro Nears $1.18 on Middle East Talk Hopes

The Indonesian rupiah held above IDR 17,110 per dollar on Tuesday, hovering near record lows despite a softer US dollar, as capital outflows and concerns over weakening fundamentals, such as declining foreign reserves in March, continued to weigh on sentiment. Hopes for a potential US–Iran deal offered little relief, underscoring domestic pressures. The weak rupiah is fueling imported inflation, particularly in manufacturing and transport. While March inflation stayed within Bank Indonesia’s target, risks are tilted upward amid volatile oil prices and rising fiscal demands from President Prabowo’s programs. Focus now shifts to next week’s policy meeting, after BI left rates unchanged at 4.75% in March for a sixth straight time, following a total 150 basis points of cuts since September 2024. Recently, officials have signaled limited room for further easing, with Governor Warjiyo stressing a pivot toward safeguarding stability and resilience against external shocks.

Rupiah Struggles as Domestic Pressures Outweigh Softer Dollar

The South Korean won hovered around 1,485 per dollar, remaining near a one-month high, as investors reassessed the prospect of continued dialogue between the US and Iran. Markets have begun to price a partial de-escalation in US–Iran tensions, but uncertainty remains elevated as recent negotiations proved inconclusive and key flashpoints such as the Strait of Hormuz remain active risk factors. This keeps safe-haven demand for the US dollar broadly supported, limiting any meaningful KRW rebound. At the same time, oil prices, while off recent highs, remain elevated compared to pre-shock levels, sustaining Korea’s energy import burden and reinforcing structural demand for dollars. With no strong domestic catalyst from policy or capital inflows, the won continues to lack an independent support driver. Meanwhile, the dollar has only eased marginally, leaving KRW movements largely range-bound and sensitive to headline-driven shifts in global risk sentiment.

South Korean Won Remains Under Pressure

The Indian rupee hovered near 93.3 per dollar, stabilizing after slipping to a three-week low as intervention and tighter oversight by the Reserve Bank of India helped calm volatility. The central bank has been pushing lenders to unwind large arbitrage positions built across domestic and offshore markets, easing dollar demand and helping the currency recover from recent lows. Regulators are now reviewing how banks exited these trades, including whether positions were shifted to corporate clients or related entities instead of being fully closed in the open market. The scrutiny has also curbed speculative activity, helping reduce volatility in the forex market. Separately, markets also digested inflation data showing India’s annual rate rose to 3.4% in March 2026 from 3.21% in the previous month, marking the fastest pace in over a year but slightly below expectations.

Indian Rupee Steadies as RBI Tightens Oversight

The Japanese yen strengthened toward 159 per dollar on Tuesday, ending a three-day losing streak as both the dollar and oil prices retreated on rising expectations that a US-Iran agreement could eventually be reached. President Donald Trump said Tehran had reached out to Washington just hours after the US imposed a naval blockade on Iranian oil shipments in the Strait of Hormuz. Iranian President Masoud Pezeshkian also stated that Iran is prepared to continue peace talks, provided they remain within the framework of international law. The yen additionally drew support from intervention concerns as it neared the key 160 per dollar threshold, a level that previously triggered Japanese authorities to step in to stabilize the currency. Meanwhile, Bank of Japan Governor Kazuo Ueda emphasized on Monday the need to remain alert to the economic fallout from the Iran conflict, warning that higher oil prices could weigh on Japan’s growth outlook.

Yen Rises as Oil, Dollar Retreat

The offshore yuan traded around 6.81 per dollar, hovering near its strongest level since March 2023, supported by improved sentiment following renewed diplomatic signals between the US and Iran. Trump stated that Tehran had reached out for a deal, while Iranian President Pezeshkian signaled a willingness to continue talks if they align with international law. The remarks came after the first talks failed to produce an agreement, prompting the US to announce a blockade of the Strait of Hormuz. The Middle East war has boosted interest in China’s currency as a dollar alternative, reviving “petroyuan” talk promoted by Xi Jinping. The yuan has gained traction in energy trade, with Iran accepting it for oil and reportedly favoring ships using it through the Strait of Hormuz. Separately, Xi is expected to meet Vietnam’s leader To Lam this week to strengthen energy ties amid supply risks. Domestically, investors are waiting for upcoming trade data, with exports and imports expected to ease.

Offshore Yuan Hovers Near 3-Year High

The New Zealand dollar held on to its recent gains, trading around $0.586 on Tuesday, its highest level in over three weeks, amid expectations that US–Iran talks could resume following unsuccessful discussions over the weekend in Pakistan. President Donald Trump said that Iran had called about making a deal, even as a US blockade of Iranian ports came into effect. Separately, Iranian President Masoud Pezeshkian stated that the country is prepared to continue negotiations within the framework of international law. Meanwhile, the Reserve Bank of New Zealand kept its cash rate unchanged last week while signaling readiness to tighten policy if core inflation accelerates amid rising fuel prices linked to the Middle East conflict. Governor Anna Breman noted that if medium-term inflation begins to pick up, the central bank would respond decisively with rate hikes. Traders assign a 38% probability of a rate hike in May, with a move by July now fully priced in.

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