The Japanese yen and other Asian currencies weakened Thursday after the US Federal Reserve raised benchmark rates by a quarter percentage point — the first increase in three years — signaling further tightening to curb inflation. The yen fell past ¥156 per dollar, weakening over 1.1% since the Fed's decision, while the dollar strengthened 0.7% against key trading partners. US two-year Treasury yields rose to 4.74% before settling at 4.71%.

The Korean won dropped 0.3% to Won1,380, and the Indian rupee hit Rs96.07, its weakest since late July. These moves undermine recent US-Japan efforts to support the yen and intensify scrutiny on the Bank of Japan's Friday meeting, where a 0.25 percentage point hike to 1.25% is widely expected — the highest rate in three decades. Some hawkish BoJ policymakers advocate a 0.5 point increase. "The moves now put Asian currencies on the back foot," said Mitul Kotecha, head of Asian FX and emerging markets macro strategy at Barclays, calling a BoJ hike "almost inevitable." Higher energy prices compound pressure: Brent crude trades near $105.8 a barrel. "We've been hit by a double whammy," said Abbas Keshvani, Asia macro strategist at RBC Capital Markets.

The Chinese renminbi remained stable at Rmb6.71 ahead of a Trump-Xi Jinping summit in Washington next week. The New Zealand dollar fell ~1% and the Australian dollar dropped 0.6% since the Fed's move.