On Friday, a pullback in the dollar from an 18-month peak — driven by retreating Treasury yields and a broad shift toward safe-haven assets — left most Asian currencies holding relatively steady. After the Reserve Bank of India deployed market measures, the rupee posted the strongest gains among currencies in the region.

Trading at 101.982 as of 23:57 ET (03:57 GMT), the U.S. Dollar Index edged down 0.1%, leaving it pointed toward a 0.2% loss across the week. For the first time in five consecutive weeks, the dollar ended a weekly session lower — a reversal that came after above-forecast inflation figures out of the United States had driven the currency to a peak not seen since the opening months of 2025.

Falling returns on U.S. Treasury notes drew portfolio allocations toward government debt, pulling the dollar lower as market participants weighed apprehensions about spending on artificial intelligence and the broader cost of servicing public borrowing. On Thursday, the 10-year Treasury yield settled near 5.09%, a rate not seen since late September 23rd.

Trading in the yen held largely steady through Asian hours, with the dollar's weekly position against the Japanese currency drifting toward a loss of around 0.3%. Both the onshore and offshore yuan held relatively steady, while the dollar edged up 0.1% against the South Korean won, leaving that currency on track for a 0.2% loss over the week.

Market participants kept a close watch on rate-path signals from the Federal Reserve, with attention turning toward a scheduled address by Fed Chair Kevin Warsh at an International Monetary Fund gathering in Bangkok. Futures market pricing from CME FedWatch put the odds of a rate rise in October at roughly 28%, with a separate 66% likelihood attached to an additional move when policymakers next convened in December.

Gains for the rupee left it trading ahead of other currencies in the region, with the USD/INR pair slipping to just under 95, a move of roughly 0.2%. Heading into the week on the back of a brush with all-time lows around 97 to the dollar, the currency stood to close out the period about 1.9% higher.

At the heart of the Reserve Bank of India's response to dollar speculation sat two instruments: tighter controls on foreign exchange derivatives trading, and a dedicated facility giving state-owned oil companies direct access to dollar purchases. Those policy steps weighed on rupee forward-market liquidity, pushed hedging costs upward, and left traders navigating an uncertain environment — conditions that eventually drew the central bank into issuing clarifications on certain regulations.

A 0.3% lift against the US dollar left the Australian currency heading into the weekend with a 0.6% net decline for the week still in place. Holding near its opening level, the Singapore dollar mirrored a broader mood of restraint across Asian currency markets, where participants were weighing expectations around U.S. borrowing costs against a backdrop of wider financial uncertainties.