Investing.com — Most Asian currencies rose on Monday as the dollar fell ahead of the inauguration of US President-elect Donald Trump, while China's central bank kept its benchmark lending rates unchanged to support the yuan.
Regional currencies saw marginal gains as markets were cautious ahead of Trump's inauguration in anticipation of additional trade tariffs on Chinese exports. This could spark a trade war and affect most Asian economies due to their trade-dependent economies.
The index fell by 0.3% during Asian trading, retreating from its highest level in 26 months, which it reached last week. The dollar has consistently remained near its highest level in two years after the Federal Reserve turned hawkish last month.
It also decreased by 0.3%.
The Chinese yuan remained largely silent even as the People's Bank of China maintained key loan interest rates
The internal Chinese yuan pair rose by 0.1%, while the external pair rose by 0.2%.
The Chinese yuan traded in a narrow range on Monday, showing little reaction to the People's Bank of China's decision to keep key loan rates steady.
The People's Bank of China kept the one-year interest rate unchanged at 3.1% and maintained the interest rate used to set mortgage rates at 3.60%.
The move, aimed at shoring up the yuan's weakness, maintaining liquidity, and supporting the economic recovery, did little to impact market sentiment toward the currency.
Japan and Malaysia await the interest rate decision
The Japanese Yen pair fell by 0.3% as markets expect interest rates to rise later this week.
The Bank of Japan is expected to raise interest rates next week, provided there are no market disruptions after Trump's inauguration. Reuters reported on Friday, citing sources familiar with the matter, that the central bank is likely to reiterate its commitment to further raising interest rates if the economy continues its recovery.
The Malaysian ringgit pair fell by 0.1% ahead of the session. The Bank of England is expected to keep interest rates steady at 3.00% for the tenth straight meeting on Wednesday due to strong economic growth and inflation control, a Reuters poll showed.
Elsewhere, the Australian dollar rose 0.2%, while the Singapore dollar fell 0.3%.
The Thai Baht pair was largely unchanged, while the Indian Rupee pair fell by 0.1%.
The South Korean won pair fell by 0.4% amid the ongoing political crisis in the country.
