Asian currencies weaken as dollar gains, kiwi tumbles on RBNZ outlook

Asian currencies broadly weakened on Wednesday as the US dollar strengthened near a two-week high, supported by rising US Treasury yields and growing expectations of a Federal Reserve interest rate hike in September. The New Zealand dollar suffered notable declines despite the Reserve Bank of New Zealand delivering a 25-basis-point rate hike to 2.75%, as policymakers offered vague guidance that dampened expectations for further tightening in October. Global bond yields climbed sharply alongside surging oil prices and geopolitical tensions between the US and Iran, fueling renewed inflation concerns. The benchmark US 10-year Treasury yield rose to 4.81%, while markets increased the implied probability of a September Fed hike to 68%. In Asia, the Japanese yen hovered above the critical 160 per dollar threshold as the Bank of Japan signaled rate debates for September, while the Australian dollar softened despite solid second-quarter GDP growth of 0.4%. The overall foreign exchange environment remains pressured by elevated US yields and geopolitical risk, keeping regional currencies on the defensive ahead of upcoming US labor market and inflation data releases.