Asian currencies rose slightly on Monday, while the dollar weakened, as investors remained cautious ahead of a deadline that could lead to a temporary US government shutdown.

Market participants also await interest rate decisions from the central banks of Australia and India later this week.

The USD Index, which measures the value of the US dollar against a basket of major currencies, fell 0.2%, while USD Index futures also fell 0.2% as of 11:17 AM Moscow time.

Focus on US Government Shutdown Risks

Investor caution is focused on whether Congress will pass a funding bill before the end of the current fiscal year, as failure to do so will lead to a partial government shutdown starting Wednesday.

Trump is scheduled to meet with top lawmakers later Monday at the White House in an attempt to reach a funding agreement before the deadline.

A shutdown would have immediate implications for financial markets and government operations, including the release of economic data. The suspension will delay the release of critical economic data, including the September non-farm payrolls report scheduled for Friday.

Asian currencies rise; RBA and RBI rate decisions expected this week

Risk appetite in Asia was supported by expectations that a potential interruption in US federal government funding could trigger an outflow from US assets and provide short-term support for regional currencies.

The Japanese yen (USD/JPY) fell 0.4% on Monday, while the Singapore dollar (USD/SGD) fell 0.1%.

The South Korean won (USD/KRW) fell 0.4%, while the Indonesian rupiah (USD/IDR) fell 0.3%. The domestic Chinese yuan pair USD/CNY fell 0.2%, while the offshore USD/CNH pair fell 0.3%.

The Australian dollar AUD/USD rose 0.3%. The Reserve Bank of Australia will hold its monetary policy meeting on Tuesday, and markets are widely expecting the central bank to leave interest rates unchanged at 3.6%.

In India, the Reserve Bank of India (RBI) is expected to keep its key interest rate at 5.50% during its upcoming meeting ending October 1, 2025, although a surprise rate cut is possible.

The Indian rupee USD/INR traded flat near record highs.