On Wednesday, most Asian currencies traded within a narrow range as the dollar approached a six-week high, influenced by ongoing concerns regarding the Iran conflict and its implications for interest rates. The dollar index and futures saw a slight increase, buoyed by speculation that persistent inflation could prompt the Federal Reserve to raise interest rates later this year. Philadelphia Fed President Anna Paulson remarked that while current monetary policy seems appropriately restrictive, market speculation about rate hikes is 'healthy'. The surge in oil prices, resulting from the Iran war that has disrupted a significant portion of global oil supplies, has contributed to rising inflation, particularly in energy costs.

The Indian rupee notably underperformed, hitting a record low of 96.784 rupees against the dollar, largely due to India's heavy reliance on oil imports. In contrast, the Japanese yen showed slight resilience amid growing expectations of a potential interest rate hike by the Bank of Japan in June. Other Asian currencies, such as the Australian dollar and the South Korean won, remained relatively stable, while tensions between China and Taiwan increased following comments from U.S. President Donald Trump regarding military support.