Investing.com– Most Asian currencies weakened on Tuesday as the dollar rebounded after the inauguration of US President Donald Trump, while the Japanese yen and the Malaysian ringgit gained ahead of results rate of their central banks this week.
Trump took office overnight and announced a series of executive orders, cementing his campaign promises.
It rose 0.3% during Asian trade, after losing more than 1% overnight. also 0.3% higher.
Asian currencies fall under Trump 2.0 on fears of tariffs
Regional currencies were under pressure from a rising dollar, which was boosted by expectations of new trade tariffs under the Trump administration. Trump did not provide details on imposing new tariffs, although reports have indicated that they are expected to be announced gradually.
Trump had promised to impose up to 60% additional tariffs on Chinese exports. If fully implemented, new tariffs could have a major impact on most Asian economies because of their trade-dependent economy.
The Australian dollar pair fell 0.4%, while the Singapore dollar pair slipped 0.2% higher.
The Chinese yuan offshore pair rose 0.3%, while the onshore pair was largely unchanged on Tuesday.
The Indonesian rupiah pair climbed 0.5%, while the Philippines peso gained 0.3%.
The Indian rupee pair entered 0.1% higher, while the South Korean winner pair was largely silent.
The Greenback's strength is expected to put further pressure on regional currencies as new tariffs are likely to lead to lower trade imbalances and higher inflation.
Tariffs are designed to reduce imports, which can reduce the trade deficit by limiting the flow of dollars out of the US economy. This reduced supply in the global market can increase its value relative to other currencies.
In addition, they can trigger inflationary pressures. Markets can then expect higher rates at the Federal Reserve for longer, further strengthening the dollar.
Japan and Malaysia interest rate decisions were expected
The Japanese yen pair fell 0.5% as markets priced in a rise in interest rate futures later this week.
The BOJ is expected to raise rates, as long as there is no market turmoil after Trump's inauguration. The central bank is likely to reiterate its commitment to further rate hikes if the economy continues to shrink, Reuters said citing sources familiar with the matter.
The Malaysian ringgit pair moved 0.5% lower ahead of the . The BNM is expected to hold rates steady at 3.00% for the 10th straight meeting on Wednesday due to strong economic growth and control of inflation, a Reuters poll showed.
