Most Asian currencies traded in a narrow range on Monday, as lingering uncertainty over the US-Israeli war against Iran and caution ahead of the Federal Reserve meeting lifted the dollar to a 10-month high.

The Australian dollar outperformed, strengthening ahead of the Reserve Bank of Australia's meeting on Tuesday, where the central bank is expected to raise rates.

Most other Asian currencies fluctuated, as the conflict with Iran showed no signs of abating, keeping oil prices high, and concerns about energy-fueled inflation remained lingering.

Oil briefly took a breather after US President Donald Trump called on a coalition of countries to help prevent supply disruptions due to the conflict with Iran. The Chinese Yuan Stable on Positive Industrial Production and Retail Sales Data

The USD/CNY (Chinese Yuan) pair rose 0.1% after better-than-expected industrial production and retail sales data for the first two months of 2026.

The data showed that real manufacturing activity remained resilient amid strong export demand, while consumer spending rose during the Lunar New Year holiday.

Chinese fixed asset investment also unexpectedly rose during this period, returning to growth for the first time since August 2025. The figure indicated a slight increase in confidence among Chinese businesses, particularly due to increased spending on artificial intelligence.

However, China's unemployment rate unexpectedly rose in January-February, pointing to persistent weakness in some aspects of Asia's largest economy. Other Asian currencies traded in a narrow range on Monday, with the Japanese yen's USD/JPY down 0.1%, while the Singapore dollar's USD/SGD remained steady.

The Indian rupee's USD/INR rose 0.1% to a record high of 92.711 rupees, given that the South Asian nation is considered one of the most vulnerable to energy market disruptions in the Middle East.

The South Korean won's USD/KRW fell 0.3%.

The Australian dollar strengthens ahead of an RBA rate hike.

The Australian dollar's AUD/USD was the best performer in Asia, rising 0.4%.

The currency was supported mainly by rising bets that the RBA will raise rates by 25 basis points to 4.10% following its two-day meeting on Tuesday. The RBA last raised rates in December and signaled the possibility of further hikes once Australian inflation resumes in late 2025.

RBA officials recently warned that inflation risks are rising due to disruptions to energy supplies resulting from the war with Iran—statements that have increased confidence in further rate hikes this year.

Dollar near 10-month high ahead of Fed meeting

The dollar index and dollar index futures stabilized in Asian trading after reaching a 10-month high on Friday.

The dollar benefited from increased demand for safe-haven assets as the conflict with Iran showed no signs of abating, while disruptions in oil markets also heightened concerns about energy-driven inflation in the coming months.

The Fed will meet this week and is expected to leave interest rates unchanged amid growing economic uncertainty. Fears of war with Iran have also led markets to largely rule out expectations of further Fed rate cuts in the coming months.