Investing.com-- The Japanese yen slit to its weakest level in four decades on Tuesday, reviving concerns over government intervention, while stronger-than-expected Chinese factory activity helped steady the yuan and supported sentiment across Asian foreign exchange markets on the final trading day of the second quarter.

Broader Asian currencies mostly kept to tight ranges, while the dollar steadied close to a 13-month high.

The USD/JPY pair rose 0.15% to 162.18 after touching 162.41 earlier in the session, the yen’s weakest level since 1986. The move kept traders alert for another round of official intervention after Japanese Finance Minister Satsuki Katayama reiterated authorities stood ready to respond to excessive currency volatility, although she stopped short of issuing stronger warnings.

The yen is on track to weaken roughly 2% during the second quarter, marking a fourth consecutive quarterly decline as Japan’s ultra-low interest rates continue to leave the currency vulnerable against a still-high U.S. rate environment despite intervention earlier this year.

China’s yuan was little changed after official data showed manufacturing activity unexpectedly returned to expansion in June. The CNY/USD pair was last. up 0.1% as investors took comfort from improving factory activity and broader business conditions in the world’s second-largest economy. The yuan was little changed for the quarter.

Regional economic data painted a mixed picture, with Japan’s industrial production missing expectations, while the Philippines reported inflation within the central bank’s target range alongside resilient trade figures. Thailand also released industrial production data, while investors assessed India’s latest trade balance for fresh clues on regional growth.

Won leads regional losses as quarter ends

Elsewhere in Asia, the South Korean won was among the region’s weakest performers, with USD/KRW climbing 0.5%, hurt by foreign selling as traders locked in gains after a stellar quarter for Korean equities, driven by AI-related chipmakers. USD/TWD was largely unchanged, reflecting subdued regional trading despite improving Chinese economic data. The USD/KRW pair has added nearly 3% in value so far this quarter.

Indonesia’s rupiah also remained under pressure, with USD/IDR rising 0.4% as persistent foreign capital outflows and concerns over Indonesia’s fiscal outlook continued to weigh on sentiment. The currency has been one of Asia’s weakest performers this year amid sustained selling in local equity and bond markets.

The USD/AUD added 0.2% even as the minutes of the Reserve Bank of Australia’s June meeting showed the central bank ready to raise interest rates further in the face of any more inflation risks.

Elsewhere, the USD/INR gained 0.2%, the USD/SGD traded flat, while the USD/PHP, USD/MYR and USD/THB posted modest gains.

DBS upgraded Singapore’s 2026 GDP growth forecast to 4.3% from 2.8%, citing stronger AI-driven exports, easing geopolitical risks and resilient domestic investment.

Dollar steadies before payrolls, Iran talks in focus

The US Dollar Index rose 0.2% to 101.32, as investors looked ahead to Thursday’s U.S. nonfarm payrolls report after three consecutive months of stronger-than-expected job growth reinforced expectations the Federal Reserve could keep interest rates elevated for longer.

Markets also monitored developments surrounding U.S.-Iran diplomacy after Iranian and U.S. officials signaled negotiations could resume in Doha this week, although Tehran said no formal meeting had yet been scheduled following renewed military exchanges over the weekend, leaving broader risk sentiment cautious.

The dollar is set for a 1.4% rise in the quarter after gaining 1.6% in the first three months of 2026.

Reporting by Roushni Nair