Most Asian currencies remained under pressure on Tuesday as markets continued to wrestle with uncertainty over whether recent hostilities involving Iran will subside. The prospect of lingering conflict weighed on risk appetite and bolstered demand for the U.S. dollar, even as some risk-sensitive moves were seen after comments from U.S. political leaders.
The Chinese yuan was a notable exception to the regional weakness. USD/CNY fell as much as 0.3%, bringing the pair back under the 6.9 level, after China reported a much larger-than-expected trade surplus for the January-February period. That stronger-than-anticipated print was driven primarily by a pronounced surge in exports and was supported by a firmer midpoint fix set by the People’s Bank of China.
Official data showed exports led the unexpected expansion in the trade balance, indicating that China’s vast export sector - a central pillar of growth - remained resilient following a robust 2025. Strong domestic spending during the Lunar New Year holiday also helped lift imports beyond expectations, though the report acknowledged it is unclear whether that strength will persist once the holiday period is behind it.
Across the region, the dollar held a firmer posture. The dollar index rose 0.2% in Asian trade as investors priced in the risk that the conflict’s inflationary implications could persist, keeping the greenback in demand as a safe-haven asset.
Comments from U.S. President Donald Trump saying a conclusion to the war was close provided some lift to risk assets at one point, but those moves were offset after Iran’s Revolutionary Guard dismissed the idea that a deescalation was imminent. The prior weekend’s escalation, in which U.S. and Israeli strikes reportedly struck Tehran’s oil infrastructure and Iran mounted retaliatory attacks on energy facilities in several neighboring Middle Eastern countries as well as on ships in the Strait of Hormuz, kept markets on edge.
Japan presented its own mix of data and policy implications. USD/JPY rose 0.1% as the yen remained under modest pressure from broad dollar strength and lingering concerns about energy-related disruptions that could weigh on the Japanese economy. Revised gross domestic product figures for the fourth quarter showed a substantially stronger outcome than first reported. That upward revision was supported by robust capital expenditures and steady consumer spending.
The revised Japanese GDP data highlighted some resilience in the economy, though exports were still shown to be under pressure. Private spending growth was revised higher but remained close to a longer-run quarterly average of about 0.3%. While the stronger reading gives the Bank of Japan more theoretical room to consider tightening, officials are unlikely to move on rates amid the present market uncertainty.
Elsewhere in Asia, the Australian dollar fell, with AUD/USD down 0.2% during the session. The South Korean won was notably weaker, as USD/KRW jumped about 1.1%. The Singapore dollar also felt pressure, with USD/SGD rising roughly 0.1%. The Indian rupee drifted lower as USD/INR added 0.1%, pushing the pair further above the 92 rupee level.
In short, while the Chinese trade figures offered a positive backdrop for the yuan and indicated ongoing support for growth from external demand and holiday-related domestic spending, most regional currencies struggled as markets evaluated conflicting signals on prospects for a resolution to the conflict and the possible economic effects of continued energy disruptions.
Market context and implications
The recent developments present a mixed picture: stronger Chinese external demand and holiday spending may help underpin growth in the near term, while geopolitical friction and energy shocks continue to favor safe-haven assets such as the dollar. Monetary policy considerations in Japan may shift subtly if resilience in domestic demand proves durable, but central bank action appears unlikely while market uncertainty remains elevated.