Nov 26 2024: Asian currencies weakened on Tuesday, with the Chinese yuan dropping to a four-month low against a strengthening U.S. dollar after President-elect Donald Trump announced plans for additional tariffs on China, Mexico, and Canada.
Trump proposed a 25% tariff on all imports from Mexico and Canada and an extra 10% tariff on Chinese goods, intensifying concerns over global trade relations.
The U.S. Dollar Index gained 0.2% in Asian trading, reversing some losses from the previous day when U.S. yields fell following Scott Bessent’s appointment as Treasury Secretary.
The onshore yuan (USD/CNY) rose 0.3% to its weakest level since late July, while the offshore yuan (USD/CNH) climbed 0.2%. Other regional currencies also came under pressure amid worries over trade tensions and slowing global growth.
The Singaporean dollar (USD/SGD) edged 0.2% higher, and the Thai baht (USD/THB) increased by 0.3%. The Australian dollar (AUD/USD), heavily tied to China’s trade activity, slipped 0.2%. Meanwhile, the Japanese yen (USD/JPY) strengthened by 0.4%, benefiting from safe-haven demand.
Trump’s aggressive tariff stance has created heightened uncertainty for Asian markets, particularly for export-driven economies like South Korea, Taiwan, and Malaysia, which may see slower growth if U.S. demand for their goods declines. South Korea’s won (USD/KRW) and Taiwan’s dollar (USD/TWD) both ticked up 0.1%, while the Malaysian ringgit (USD/MYR) rose 0.3%.
India and Indonesia, with more domestic-focused economies, might face less direct tariff impact but could still contend with higher import costs and potential disruptions in global supply chains. The Indian rupee (USD/INR) remained stable at 84.28, hovering near record lows.
Key Data and Policy Decisions in Focus
This week, South Korea’s central bank will announce its interest rate decision on Wednesday. India is set to release its third-quarter GDP data on Friday, and China will publish its purchasing managers index figures on Saturday.
In the U.S., the Federal Reserve’s personal consumption expenditures (PCE) price index, a key inflation gauge, is due on Wednesday, potentially offering insights into future rate decisions. The Fed’s November meeting minutes are also expected on Thursday.
