Investing.com – Most Asian currencies weakened on Wednesday, with the Chinese yuan hitting its weakest level in six months, as continued concerns over high U.S. interest rates kept investors bullish on the dollar.

Sentiment towards risk-oriented regional markets remained faint, especially in the face of hawkish comments from the Federal Reserve. Concerns about faint regional economic growth were also of great importance.

Both indexes rose 0.1% in Asian trading, extending overnight gains after Minneapolis Fed President Neel Kashkari said policymakers had not ruled out further interest rate increases to combat inflation.

His comments come just days before closely watched data that is the Fed’s preferred measure of inflation.

Chinese yuan weakens, USDCNY at the highest level in 6 months

The Chinese yuan weakened as the People’s Bank of China made a soft mid-rate correction, sending the pair to its highest level since mid-November.

The People’s Bank of China has so far kept a tight grip on the yuan to keep the currency from weakening, but it now appeared to be loosening its grip somewhat amid continued yuan selling pressure and weakness in the Chinese economy.

Beijing continued to introduce measures to support the real estate market, generating some optimism across the country. However, investors had doubts about how Beijing planned to finance and implement stimulus measures for the real estate sector, given that the space had been in crisis for more than three years.

The Japanese yen is weakening, BOJ comments give moderate signals

The Japanese yen weakened further on Wednesday, with the pair rising above 157 yen against the dollar.

The currency received little support from somewhat moderate comments from Bank of Japan officials.

BOJ member Adachi Seiji warned that the central bank may hastily tighten policy if the weakening yen affects inflation. He also predicted that inflation would boost in the summer-autumn period.

However, Seiji also said the BOJ must remain cautious in tightening policy, and in the near term, policy will remain accommodative to strengthen the Japanese economy.

Australian dollar slightly supported by heated CPI

The Australian dollar saw restricted strengthening on Wednesday and the currency pair rose slightly even though inflation rose more than expected in April.

The reading raised expectations that the Reserve Bank of Australia will need to keep interest rates high for longer or even raise them this year to bring down inflation.

This scenario bodes well for Australia, although this optimism was thwarted by the strengthening of the dollar and concerns about slowing economic growth in Australia.

Broader Asian currencies weakened. The South Korean won pair rose 0.2%, while the Singapore dollar pair rose 0.1%.

The Indian rupee pair rose 0.1% and saw a return to the record highs reached in May, above 83 rupees per dollar.