Forex

The U.S. Treasury Department kept South Korea on its currency monitoring list for a fourth consecutive report in its July 2026 semiannual review, saying the won’s sustained weakness does not match the country’s strong fundamentals. It cited South Korea’s 6.6% of GDP current account surplus and a $45 billion goods and services surplus with the United States, while noting the Bank of Korea was a net seller of $28 billion in foreign exchange in 2025. Treasury also said large, largely unhedged overseas investments by South Korean households and institutions added to depreciation pressure on the won. The move does not designate South Korea a currency manipulator but signals continued U.S. policy concern over the won’s depreciation trend, according to the report.

Nigeria’s naira is facing fresh depreciation pressure as fuel importers step up dollar purchases to build inventories after receiving new regulatory licences, lifting demand for foreign exchange. The currency was quoted at N1,368/$ on the official market, while the parallel market was around N1,420/$. Downstream operators say the import policy is intensifying FX pressure, distorting prices and hurting local refiners’ competitiveness. They point to imported petrol selling for about N1,350 per litre, far above the price of supplies from the Dangote refinery.

The yen fell through ¥163 against the dollar, marking its lowest level since 1986. Markets are focusing on signs that Japanese authorities may be less inclined to intervene, while expectations of fiscal stimulus and a wide Japan-U.S. rate gap—U.S. 3.5–3.75% versus Japan 1%—add to carry-trade pressure. Japan’s $73.6 billion intervention in April and May failed to reverse the slide, and many investors now see ¥165 as the next line for action, though no substantive intervention has appeared.

Statistics New Zealand said CPI rose 4.1% year on year in Q2 2026, a two-year high that exceeded the prior 3.1% and market expectations of 4.0%, while quarterly inflation accelerated to 1.5% versus a 1.4% consensus. The hotter inflation print reinforced expectations that the Reserve Bank of New Zealand could deliver consecutive rate hikes, lifting NZD/USD to around 0.5865. Markets were also awaiting the US ADP employment report later in the day. Middle East tensions remained elevated, but the immediate catalyst for the move was the New Zealand inflation surprise.

In Taipei trading on July 20, the U.S. dollar surged against the Taiwan dollar, breaking above NT$32.40 in early trade and reaching NT$32.421 at 10:30 a.m., up NT$0.133 on the day. The move followed foreign investors’ net sale of NT$189.0 billion of Taiwan stocks on Friday, when the Taiex sank 6.47% to 42671.27 and TSMC fell 7.29%. Continued foreign selling and faster dividend-related fund repatriation, alongside hawkish comments from Federal Reserve officials and rising tensions in the Middle East, added pressure on the Taiwan dollar. Some market participants expect USD/TWD could test NT$35.2 in the short term.

Bank Indonesia has raised interest rates by a total of 100 basis points this year and has also intervened directly to steady the rupiah. The currency is expected to strengthen to 17,850 per dollar this quarter from 17,895 at the prior close. Indonesia’s benchmark 10-year government bond yield of about 7.25%—among the highest in emerging markets—has helped draw foreign inflows for a second straight month. Markets are split ahead of Wednesday’s rate decision over whether the central bank will hold or deliver another 25-basis-point hike, while a potential MSCI reclassification still threatens about US$15 billion in passive outflows.

Indonesia’s foreign direct investment rose 27.4% year on year in the second quarter, helping the rupiah post a fourth straight day of gains and pushing USD/IDR down to around 17,990. Separately, Iran has instructed Yemen’s Houthi militia to prepare to close the Red Sea shipping route in response to a potential U.S. strike on Iranian power infrastructure. Explosions were also reported in several locations, adding to concerns about risks to global oil supplies and spilling over into Indonesia’s foreign-exchange market.

US inflation eased more than expected in June, with headline CPI slowing to 3.5% year on year and core CPI to 2.6%. After the release, the US dollar index (DXY) fell 0.3%, USDJPY closed 0.1% lower and USDSGD also softened. The cooling print reduced near-term expectations for Federal Reserve rate hikes and pushed short-dated US Treasury yields lower, pressuring the dollar and rippling across major Asian currency pairs.

S&P Global has reaffirmed Indonesia’s sovereign credit rating at BBB/A-2 with a stable outlook, saying recent fiscal strains should be temporary and could be offset by higher commodity prices and spending cuts. The decision contrasts with Moody’s and Fitch, which cut their outlooks for Indonesia to negative earlier in the year, helping bolster market confidence in the country’s economic management. A Bank Indonesia official said the rupiah has significant room to strengthen after it recently touched a record low of 18,000 per dollar.

USD/JPY slid by ¥1 in minutes after Japan’s 10-year and 20-year government bond yields fell 10 basis points on the day. Japan’s producer price index unexpectedly accelerated to 7.1%, the highest in months, adding to market concerns about pressure on the Bank of Japan. A Japanese official said the government wants GPIF and other major domestic funds to shift more money back into Japanese assets, a move that could encourage capital repatriation and dampen yen depreciation momentum. The yen is hovering near 40-year lows, while investors see the BOJ’s policy options as increasingly limited.