In the minutes of its most recent meeting, released Tuesday, the Reserve Bank of Australia said it was concerned about the impact of a rising Australian dollar, noting "an appreciating exchange rate could complicate progress in activity rebalancing towards the non-mining sectors of the economy." The RBA also noted that low inflation could allow it to cut interest rates further. At the April 5 meeting, the RBA had kept rates steady at a record low 2.0 percent.
Goldman Sachs analysts said in a note that the minutes did not provide a strong signal for a near term rate cut, but they added that it is too early to rule out a potential cut in May altogether, "given the upward pressure on the Aussie dollar and related downward risks to growth and inflation."
The Japanese yen, which touched levels under 108 against the dollar in the previous session, advanced late in the session. As of 2:50 p.m. HK/SIN time, after the Japan market close, the dollar/yen pair traded at 108.77, after reaching as high as 109.20 earlier.
Major Japanese exporters saw a rebound in their stock prices, with automakers Toyota, Nissan and Honda adding between 3.57 and 4.46 percent. Shares of Sony rebounded 6.49 percent. Shares of exporters, which typically benefit from a weaker yen, had tumbled in the previous session after reports said some manufacturers were affected by the earthquakes that struck Kyushu island in the south of Japan last week, causing sizable damage.
Reuters reported that Sony and Honda have said their affected production plants in the region will remain suspended for the time being.
In a media statement on Sunday, Toyota said it would suspend production on its vehicle assembly lines in stages, between April 18 and April 23, due to supply shortages resulting from the quakes.
Analysts didn't expect broader damage to Japan's economy.
Marcel Thieliant, a senior Japan economist at Capital Economics, said in a morning note, "the scale of damage does not appear huge and production shutdowns by major manufacturers should be reversed before long."
But Thieliant added that in the short term, the impact of the disaster would also be felt outside of the Kumamoto prefecture. In particular, he said the "shutdown at Toyota could reduce industrial output by up to 1.8 percent in April," adding the impact will be larger if the shutdown persisted for longer.
In South Korea, the central bank kept its base rate unchanged at 1.5 percent, in line with a Reuters poll. In a statement on its website, the Bank of Korea said it forecast the domestic economy will show "a trend of modest improvement going forward," centering around domestic demand activities.
The Korean Won strengthened against the dollar, with the pair trading down 0.83 percent at 1,133.94 as of 3:25 p.m. HK/SIN time, compared with the previous session's close at 1,143.38.