Investing.com– Most Asian currencies rose on Tuesday, with the Chinese yuan supporting Beijing’s decision to introduce more stimulus measures while the Australian dollar rose on expectations of hawkish signals from the Federal Reserve.

A weaker US dollar helped regional markets as the greenback remained subdued following last week’s shock rate cut by the Federal Reserve. This week, attention turns to further guidance from the Fed, as well as key inflation data.

The sentiment towards regional markets has been further boosted by the Chinese government’s introduction of more stimulus measures to support lagging economic growth.

China’s yuan hits 16-month high on economic recovery

The Chinese yuan strengthened on Tuesday, with the currency pair falling 0.2% to its lowest level since May 2023.

Chinese markets rose after the government announced a series of stimulus measures, the most prominent of which were a cut in reserve requirements for banks and a reduction in mortgage interest rates aimed at boosting the property market.

The move raised hopes that Asia’s largest economy could recover, and that it could then ripple through the region. But recent economic readings have shown a steady slowdown in activity for most of the third quarter.

Lower interest rates also herald further weakening of the yuan, although recent government intervention has kept the currency sturdy.

The yuan’s exchange rate on overseas markets fell 0.2% to a 16-month low.

Australian dollar rises with RBA on alert

The Australian dollar strengthened, with the pair up 0.2% and approaching its 2024 peak.

The RBA is expected to make this decision at the end of its meeting later in the day.

However, recent signs of high inflation and a sturdy labour market are likely to prompt the central bank to take a hawkish stance, with the RBA likely to signal that interest rates will remain high for an extended period.

This trend sets the RBA apart from other global banks, but it is also beneficial for the Australian bank.

Broader Asian currencies strengthened. The Japanese yen stabilised after a piercing fall in overnight trading. PMI data showed a steady decline in Japanese activity, while gains were even stronger.

The value of the South Korean won fell slightly.

Asian trade stabilised after a faint start to the week.

The Singapore dollar fell slightly, while the Indian rupee moved further away from record levels.