Investing.com– Most Asian currencies fell on Friday as the U.S. dollar remained near a 13-month high while the Japanese yen strengthened after consumer inflation was slightly above expectations.

Regional currencies have lost ground over the past few weeks under pressure from dollar strength as sentiment has been weighed on by caution over the slower pace of Federal Reserve interest rate cuts. Traders were also nervous about what U.S. President-elect Donald Trump’s policies would mean for Asian countries, especially China.

The Chinese yuan pair rose by 0.1% and reached its highest level in four months. So far in November, the yuan has depreciated by as much as 1.8% against the dollar as local markets were also weighed on by moderate signals on Chinese stimulus measures.

The South Korean won pair and the Singapore dollar pair remained largely flat. Both currencies have lost almost 2% against the dollar so far this month.

The Australian dollar pair was also unchanged while the Indian rupee pair was trading below record highs at around Rs 84.50.

Dollar stable at annual peak

The stock rose slightly to 107.06 after hitting a yearly high of 107.15 on Thursday. also stabilized near a 13-month high in Asian trade.

The latest data – particularly last week’s volatile inflation readings and better-than-expected weekly jobless claims data on Thursday – have led investors to lower expectations for the Fed’s December interest rate cut.

Speculation that Trump’s policies could reignite inflation and limit the Fed’s ability to lower interest rates over the longer term is also supporting the dollar.

Traders were cautious about the outlook for the Fed’s rate path, pricing in a 61.3% chance of a 25-basis-point cut at the December meeting, down from 72.2% a week ago, according to .

Fed Chairman Jerome Powell recently said the central bank is in no rush to cut interest rates, citing the economy’s resilience.

Overnight, labor market data showed the initial weekly unexpectedly fell to a seven-month low, but also showed laid-off workers taking longer to find modern jobs, indicating the unemployment rate could rise this month.

The (PCE) index, the Fed’s preferred measure of inflation, will be released next Friday and is expected to provide more guidance on interest rates.

Japanese yen stable after stronger than expected CPI

The Japanese yen pair fell 0.1% after falling 0.6% in the previous session. But the currency also suffered ponderous losses against the dollar in October and November.

Inflation in Japan rose slightly more than expected in October, while the core measure rose above the central bank’s one-year target range, maintaining forecasts for another interest rate hike by the Bank of Japan (BOJ). A Reuters poll showed on Friday that analysts expect the BoJ to raise interest rates in December.

Rigid inflation is expected to encourage the BoJ to raise interest rates further after the central bank raised rates twice in 2024.

BOJ Governor Kazuo Ueda said on Thursday that the bank will analyze data before revising interest rates next month and will “seriously” consider the impact that yen movements may have on the economic and price outlook.

Other data showed that business activity in Japan fell for a fifth straight month in November as demand from private sector companies remained flat during the period.