Investing.com-- Most Asian currencies traded near flatline levels on Thursday, with Japanese yen near 18-month lows on snap election concerns, while the South Korean won reversed sharp gains triggered by U.S. Treasury Secretary Scott Bessent's verbal support.
The US Dollar Index was largely flat, holding near one-month highs. US Dollar Index Futures also traded unchanged as of 05:21 GMT.
Yen pressured by Takaichi's snap election talks
The Japanese yen rose overnight, with the USD/JPY pair falling 0.4%. The pair gained 0.1% on Thursday, remaining close to one-and-a-half-year highs.
The currency has weakened sharply in recent sessions amid speculation that Prime Minister Sanae Takaichi is preparing to call an early snap election in February.
Markets have viewed the prospect of a Takaichi-led government as yen-negative, citing her support for expansionary fiscal policy, higher public spending, and continued accommodative monetary conditions.
Investors fear that a renewed push for stimulus would limit the Bank of Japan's ability to normalise policy, widen yield differentials with the U.S. and increase pressure on the currency.
Japanese officials have warned against excessive currency moves, helping the yen stabilise, but sentiment remained fragile.
S.Korean won reverses gains after Bessent's support
In South Korea, the won extended a losing streak that has seen it decline in eight of the past nine sessions.
The USD/KRW pair rose 0.7% on Thursday after declining 0.8% in the previous session, when U.S. Treasury Secretary Scott Bessent offered rare verbal support, saying the won's recent depreciation was inconsistent with economic fundamentals.
"Korea's impressive economic performance, especially in key industries that support America's economy, make it a critical partner for us in Asia," Bessent said in a social media post.
In other news, the Bank of Korea on Thursday kept its benchmark interest rate unchanged at 2.5%, and signalled an end to its current easing cycle.
Trump says no plan to fire Powell despite probe
Elsewhere, Asian currencies were subdued as investors assessed comments from U.S. President Donald Trump, who told Reuters he has no plan to fire Federal Reserve Chair Jerome Powell despite an ongoing criminal investigation.
While the remarks helped calm fears over the Fed's independence, traders remained cautious about policy uncertainty in Washington and its potential impact on interest rate expectations.
In China, the yuan's onshore pair USD/CNY edged down 0.1%, while the offshore pair USD/CNH was little changed.
The Singapore dollar's USD/SGD pair gained 0.1%, while the Indian rupee's USD/INR traded flat.
The Australian dollar's AUD/USD pair was also largely unchanged on Thursday.