Asian currencies slide as US yields hit two-decade high

Most Asian and emerging-market currencies fell on Thursday. The US dollar held close to a two-month high, propped up by rising Treasury yields and by oil prices kept high by the Middle East conflict. The Indian rupee drifted toward the 96-per-dollar mark, and the Reserve Bank of India stepped in to keep it from breaking through.reuters+1

The dollar index traded around 101.58 after gaining about 2% in September. That was its best month since June, helped by the Federal Reserve's renewed focus on inflation. The 10-year US Treasury yield climbed above 5.3%, which Chosunbiz and Yonhap reported as the highest since 2002. Reuters said the 10-year yield had its biggest quarterly jump since 2009. Yields kept rising even though US inflation for August came in lower than expected. The PCE price index rose 3.4%, below the 3.7% forecast.investing+3

Rupee held near 96

The rupee opened at 95.95 per dollar and then slipped to 95.97. State-run oil companies were buying dollars, and foreign investors continued to pull money out of Indian markets. Overseas investors sold a net Rs 10,148.41 crore of Indian shares on Wednesday. Traders said dollar sales by state-run banks, acting for the RBI in both the spot and forward markets, kept the rupee from falling past 96.rediff+1

> "Overall, the 96 level remains an important psychological and technical area, with the rupee showing some resilience each time it approaches that level, thanks largely due to the Reserve Bank of India," said Anil Bhansali of Finrex Treasury Advisors.reuters

Bhansali said high oil prices and rising US yields will keep pushing the rupee lower, and that intervention can slow the decline but not reverse it. Brent crude gained about 14% over September as US-Iran talks stalled.reuters

Yen, won and others slip

USD/JPY rose about 0.5% to around 158.15. The yen weakened after the summary of the Bank of Japan's September meeting showed policymakers disagreed on how quickly to raise rates. Some board members wanted to move faster, while others pointed out that domestic demand had shrunk. Markets now see less than a 20% chance of a hike by October 30, though a December hike is fully priced in.investing

The South Korean won closed at 1,358.4 per dollar, down 5.6 won, even though September exports set a monthly record above \$120 billion. The Indonesian rupiah weakened to about 17,949 per dollar. The New Zealand dollar fell to around \$0.562, its lowest since November 2025. The Australian dollar held near a two-month low of \$0.69, after Australia's August trade surplus shrank to A\$495 million.koreatimes+3

Jobs data next

Investors are now waiting for US nonfarm payrolls for September, due Friday. According to FXStreet, the CME FedWatch tool shows about a 62% chance that the Fed holds rates steady in October. The RBI will announce its own policy decision next week. Anindya Banerjee of Kotak Securities said a firm dollar is a headwind for "emerging market currencies, including the rupee".fxstreet+2