Asia FX Extends Fall on Trump Tariff Fears; ringgit jumps on bets to hold BNM rate By Investing.com
Investing.com – Most Asian currencies extended losses on Wednesday as investors remained cautious ahead of potential new US tariffs under the Donald Trump administration, while the Malaysian ringgit jumped on expectations that the central bank will keep interest rates steady later in the day.
Rates are expected to hold steady at 3.00% for the 10th straight meeting on Wednesday on strong economic growth and contained inflation, a Reuters poll showed.
The Malaysian ringgit jumped 0.6% against the US dollar, with the pair falling to 4.4465 ringgit at 03:07 GMT.
Most other regional currencies were under pressure as the dollar was slightly stronger in anticipation of additional US tariffs.
It rose 0.2% in Asian trading, after losing more than 1% earlier in the week. it increased by 0.1 percent.
The Bank of Japan is expected to raise rates this week
The Japanese yen pair gained 0.2% ahead of the Bank of Japan’s (BoJ) two-day policy meeting starting on Thursday.
The BoJ is expected to hike on Friday. Reuters reported last week that the central bank is likely to reiterate its commitment to raise interest rates further if the economy continues to recover.
“If the BoJ raises rates, we believe the market will increasingly view another hike as unlikely until at least July’s upper house election (our estimate is July),” Bank of America analysts said in a recent note
Tariff fears persist under Trump 2.0
On Tuesday, Trump said he was considering imposing 10 percent tariffs on Chinese imports from February 1, as he raised the possibility of tariff increases for several major economies.
Regional currencies are facing downward pressure, despite expectations that the new tariffs will be phased in. If implemented in full, these tariffs could have a significant impact on most Asian currencies, given the region’s heavy dependence on trade with China.
The Chinese yuan’s offshore pair rose 0.3%, while the onshore pair was largely unchanged on Wednesday.
The Australian dollar pair fell by 0.2 percent.
The Singapore dollar rose by 0.3%, while the Indian rupee rose by 0.1%.
The South Korean won rose by 0.4%. South Korea is in the midst of impeachment hearings against President Yoon Suk Yeol over his attempt to impose a state of emergency in the country.
Elsewhere, the Taiwan dollar pair climbed 0.5%, while the Philippine peso gained 0.4%.
