Investing.com– Most Asian currencies rose on Friday as persistent bets on U.S. interest rate cuts pushed the dollar into negative territory for a fourth straight week, while the Japanese yen fell further on improving risk sentiment.

While the dollar rebounded from its lowest level in nearly seven months on Thursday, it was still headed for weekly declines on growing confidence that the Federal Reserve will cut interest rates in September.

The idea spurred some inflows into Asian markets, although uncertainty over China and expectations of a smaller Fed rate cut continued to limit gains in local currencies.

Japanese yen weakens as demand for secure assets declines

The Japanese yen edged higher on Friday but was among the worst-performing Asian currencies this week as rising risk appetite weakened demand for the safe-haven currency.

The yen pair fell 0.2% on Friday but is up 1.6% this week, with the pair approaching the 150 yen level. It fell to 141 yen last week amid a risk-on slump in global markets.

Still, the outlook for the yen seemed mighty, especially after gross domestic data this week showed the Japanese economy gaining momentum on higher wages. The economy’s strength is expected to give the Bank of Japan more leeway to raise interest rates further.

Dollars are losing value every week as recession fears recede

Both currencies fell slightly in Asian trade and are expected to shed about 0.2% this week, marking their fourth consecutive week in the red.

Better-than-expected July data on Thursday boosted the dollar and eased recession fears.

However, feeble inflation data released earlier this week has increased concerns that the Fed will cut interest rates in September, albeit by 25 basis points rather than 50 basis points as previously expected, it said.

Still, the prospect of lower interest rates put pressure on the dollar, while rising risk appetite also spurred capital flows into higher-yielding currencies.

Among other Asian currencies, the Chinese yuan fell 0.2% but was expected to rise slightly this week. A series of mixed economic readings from China did little to improve sentiment toward the yuan, nor did Beijing’s assurances of more stimulus measures.

Attention now turns to the People’s Bank of China’s decision on its benchmark next week after the PBOC unexpectedly cut interest rates in July.

The Australian dollar rose 0.2%, while the New Zealand dollar rose 0.5%, despite Reserve Bank of New Zealand Governor Adrian Orr announcing a rate cut of at least 50 basis points this year.

The South Korean won fell 0.4%, while the Singapore dollar fell 0.1%.

The Indian rupee has fallen slightly but still stands at a record high of over 84 rupees.