**Market Update: Asian Currencies May Face Headwinds Amid Fed’s Stance and Tariff Concerns**

Investors are navigating a relatively stable landscape across most Asian currencies on Thursday, as the aftermath of a slightly hawkish U.S. Federal Reserve meeting continues to inform market sentiment. Notably, the Indonesian rupiah has declined, despite reassurances from the country’s central bank about maintaining a balanced supply and demand for foreign exchange.

In its recent meeting, the Federal Reserve opted to keep the benchmark interest rate unchanged. Chair Jerome Powell’s remarks indicated that there are no immediate intentions for rate cuts, reinforcing the outlook of prolonged higher interest rates. As a result, the US Dollar Index has remained steady during Asian trading hours, bolstered by anticipations of slower rate cuts in 2025, alongside the ongoing influence of President Donald Trump’s tariff policies. Dollar Index Futures declined slightly, trading 0.1% lower.

**Hawkish Fed Signals Risk-Off Mood**

Federal Reserve officials reiterated their intention to sustain a restrictive monetary policy until there is increased confidence that inflation will consistently approach the Fed’s 2% target. Analysts from ING noted this sentiment, stating, “We don’t think the Fed’s conditions for a dovish tilt have been met, and USD can firm up on a hold.” Such factors, combined with uncertainty stemming from potential tariffs, exert upward pressure on the U.S. dollar and downward pressure on regional currencies.

Market participants are particularly concerned about Trump’s anticipated 25% tariffs on imports from Canada and Mexico, which are expected to start this Saturday, as well as potential additional tariffs on Chinese goods.

In currency performance, the Chinese yuan showed little movement in both offshore (USD/CNH) and onshore (USD/CNY) markets, with trading activity stunted by the ongoing Lunar New Year holiday. Meanwhile, the South Korean won experienced a slight uptick in the USD/KRW pair, rising 0.1%, amid domestic political uncertainties.

**Currency Movements Across Asia**

In Singapore, the Singapore dollar’s USD/SGD pair inched 0.1% higher, while the Indian rupee’s USD/INR pair faced a small decline of 0.1%. The Australian dollar’s AUD/USD pair also saw a minor decrease of 0.1%, as traders reacted to weaker inflation figures that fueled rate-cut expectations.

The Japanese yen traded down by 0.4% against the dollar (USD/JPY) due to a general flight to safe-haven assets amid the prevailing risk-off sentiment.

**Indonesian Rupiah Faces Challenges Despite BI’s Assurance**

The Indonesian rupiah faced headwinds as the USD/IDR pair rose 0.7% on Thursday, following a period of recent gains. This decline occurred even as Bank Indonesia (BI) stepped in to provide market stability. Edi Susianto, the head of monetary management at BI, remarked that the currency’s depreciation was primarily a reaction to the Fed’s recent announcement and the performance of U.S. equities. He reinforced that BI remains committed to intervening in the forex market to ensure stability.

As forex traders navigate these dynamics, stay alert for ongoing developments related to U.S. economic policies and geopolitical factors that could potentially influence market trends in the coming days.