Asia FX dips as dollar gains on US-China deal; Indian rupee jumps on Pak ceasefire

Investing.com-- Most Asian currencies weakened on Monday as the U.S. dollar gained following Washington’s announcement of a trade deal with China, while the Indian rupee outperformed, rallying on news of a ceasefire agreement with Pakistan.

Investors also assessed China’s latest CPI inflation report, released over the weekend, for insights on the economic growth outlook in the world’s second-largest economy. 

The US Dollar Index, which measures the greenback against a basket of major currencies, rose 0.2% in Asian trade on Monday, hovering near its one-month high.

S. Korean won, Japanese yen lead losses after US-China trade talks

U.S. and China officials concluded trade talks in Geneva, saying a trade deal had been struck, although they did not offer any more details.

U.S. Treasury Secretary Scott Bessent described the discussions as "substantial progress," while Chinese Vice Premier He Lifeng noted an "important consensus" was reached. 

Both sides agreed to establish a new economic dialogue mechanism, though specific details are expected to be released later on Monday.

Investors were hopeful that the agreement might lead to a reduction in the steep tariffs imposed by both countries during the recent tensions.

These developments supported the U.S. dollar, putting downward pressure on regional currencies.

The South Korean won’s USD/KRW pair jumped 0.6% on Monday.

The Japanese yen’s USD/JPY rose 0.4%.

The Singapore dollar’s USD/SGD pair ticked up 0.1%, while the Malaysian ringgit’s USD/MYR gained 0.4%.

The Australian dollar’s AUDUSD pair edged up 0.2%.

Indian rupee jumps on Pakistan ceasefire

India and Pakistan reached a ceasefire agreement on Saturday, after the nuclear-armed neighbors engaged in their worst fighting in decades.

The U.S.-mediated ceasefire in the Kashmir region appeared to be holding, as reports indicated a reduction in artillery fire and drone movements along the India-Pakistan border since early Sunday.

The Indian rupee’s USD/INR pair fell 0.9% on Monday to 84.621 rupees.

Yuan ticks higher; weak CPI, PPI data in focus

The Chinese yuan’s onshore USD/CNY pair fell 0.2% amid easing trade tensions between Washington and Beijing.

In other news, data on Saturday showed that China’s inflationary pressures persisted in April, with consumer prices declining for the third consecutive month and factory-gate prices experiencing their sharpest drop in six months.

The nation grappled with the economic fallout from its ongoing trade tensions with the U.S.