Asia FX extends fall on Trump tariff fears; ringgit jumps on BNM rate hold bets
2025.01.22 00:11
Investing.com – Most Asian currencies extended losses on Wednesday as investors remained cautious ahead of potential new U.S. tariffs under Donald Trump’s administration, while the Malaysian ringgit jumped on expectations that the central bank would maintain steady interest rates later in the day.
The is expected to hold rates steady at 3.00% for the 10th straight meeting on Wednesday due to robust economic growth and controlled inflation, a Reuters poll showed.
The Malaysian ringgit jumped 0.6% against the U.S. dollar, with the pair falling to 4.4465 ringgit as of 03:07 GMT.
Most other regional currencies were under pressure as the dollar was slightly stronger in anticipation of additional U.S. tariffs.
The rose 0.2% during Asian trading, after losing more than 1% at the start of the week. inched 0.1% higher.
Bank of Japan expected to hike rates this week
The Japanese yen’s pair inched 0.2% higher ahead of the Bank of Japan’s (BoJ) two-day policy meeting starting Thursday.
The BoJ is widely expected to raise on Friday. Reuters reported last week that the central bank is likely to reiterate its commitment to further rate hikes if the economy maintains its recovery.
“If the BoJ does raise rates, we believe the market will increasingly view another hike as unlikely at least until after the July Upper House elections (our estimate is July),” Bank of America analysts said in a recent note
Tariff fears persist under Trump 2.0
Trump said on Tuesday he is considering imposing 10% tariffs on Chinese imports from February 1, as he raised the possibility of increased duties on several major economies.
Regional currencies faced downward pressure, despite expectations that new tariffs would be implemented gradually. If enacted at their full scale, these tariffs could have a substantial 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’s pair inched 0.2% lower.
The Singapore dollar’s pair rose 0.3%, while the Indian rupee’s pair inched 0.1% higher.
The South Korean won’s pair rose 0.4%. South Korea is amid President Yoon Suk Yeol’s impeachment hearing over his attempt to impose martial law in the country.
Elsewhere, the Taiwanese dollar’s pair climbed 0.5%, while the Philippine peso’s gained 0.4%.
