Uncertain situation in Iran causes Asian currencies to weaken; the Renminbi surges due to strong trade data

Investing.com - On Tuesday, most Asian currencies continued to come under pressure due to the uncertain outlook for de-escalation in the US-Israel and Iran conflict.

The Chinese yuan performed notably well, surging sharply after trade data in the first two months of this year significantly exceeded expectations.

Although comments from U.S. President Donald Trump about ending the Iran war boosted some risk appetite, Iran’s Revolutionary Guard’s denial of de-escalation prospects offset this impact.

The US dollar index rose 0.2% during Asian trading hours, supported by ongoing uncertainty about war-related inflation effects, keeping the dollar in strong demand. The dollar index remains optimistic.

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Yuan Strengthens on Strong Trade Data in Jan-Feb

The USD/CNY currency pair performed much better than regional peers, falling up to 0.3% and retreating below the 6.9 level. The People’s Bank of China’s stronger midpoint setting also supported the yuan.

Government data showed that China recorded a trade surplus far exceeding expectations during January and February, driven by a significant surge in exports.

This data indicates that China’s large export sector— a key driver of economic growth— remained robust after strong performance in 2025, and may continue to support economic growth in the coming months.

Strong domestic consumption during the Lunar New Year holiday also helped boost imports beyond expectations, though whether this trend will persist after the holiday season remains to be seen.

Yen Stabilizes; Q4 GDP Revised Significantly Upward

On Tuesday, the USD/JPY pair rose 0.1%, with the yen continuing to be pressured by a strong dollar and uncertainties over energy disruptions damaging Japan’s economy.

Revised Q4 GDP data showed Japan’s economy grew far beyond initial expectations, supported by robust capital expenditure and stable consumer spending.

The data highlights some resilience in Japan’s economy, though it also shows exports remain under pressure. Private consumption growth was also revised upward but still aligns with the historical average quarterly growth of about 0.3%.

Despite this, the economy’s resilience provides the Bank of Japan with more room to raise interest rates, though in the highly uncertain market, the central bank is unlikely to take action.

Due to market caution over the Iran conflict, most broader Asian currencies declined.

The AUD/USD pair fell 0.2%, while the KRW/USD pair surged 1.1%.

The USD/SGD pair rose 0.1%, and the USD/INR pair increased 0.1%, breaking further above the 92-rupee level.

Trump on Monday said the war is nearing its end but did not provide a clear timeline. He also maintained a tough stance on Iran.

After weekend attacks on Tehran’s oil infrastructure by the US and Israel, the conflict was seen as escalating. Iran retaliated by attacking energy infrastructure in several neighboring Middle Eastern countries and targeting ships in the Strait of Hormuz.

This article was translated with the assistance of AI. For more information, please see our Terms of Use.