Most Asian currencies drifted lower on Friday as the U.S. dollar steadied ahead of closely watched January consumer price index data. Traders parsed the outlook for interest rates, with the dollar index rising slightly in Asian trade while regional currencies remained under pressure from uncertainty over U.S. monetary policy.

The Japanese yen emerged as a standout performer this week, gaining about 2.6% despite Friday's 0.2% decline. The currency's strength stemmed from increased speculation over government intervention, with hawkish comments from Japanese officials helping the yen firm past concerns over fiscal spending under Prime Minister Sanae Takaichi. Meanwhile, the Australian dollar traded up 1% and hit a three-year high following a string of hawkish comments from the Reserve Bank.

Regional currencies showed mixed performance for the week, with the South Korean won down 1.4% and benefiting from capital inflows into local equity markets as investors piled into chip stocks with AI exposure. The Chinese yuan remained close to a near three-year high hit earlier in the week, trading down 0.4% despite several strong midpoint fixes from the People's Bank. The Indian rupee was flat for the week while the Singapore dollar declined 0.6%, as markets awaited the CPI data that could provide fresh direction for dollar and regional currency movements.