BENGALURU: Asian currencies and equities fell on Tuesday, as investors pulled away from risk assets seen as less likely to benefit from a Trump presidency, while the Thai baht retreated on concerns about the appointment of a new central bank chairman.
The baht retreated 0.7% while stocks were down 0.5% after a Reuters report that ruling party loyalist and former Finance Minister Kittiratt na Ranong had been picked to chair the bank’s board.
“Kittiratt has been known as a critic of the central bank’s hawkish stance and the appointment comes to only highlight the government’s determination to push the Bank of Thailand (BOT) to loosen policy further,” Maybank analysts said in a note.
“We overall stay cautious on the pair and do not rule out further upside,” they added, referring to the dollar-baht rate.
Elsewhere, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 1.1%. Stocks in Manila declined 1.1%, for a fifth straight session of losses.
The Malaysian ringgit fell 0.4% while the Indonesian rupiah gave up 0.5%.
Investors are worried that the risk of tariffs, which Trump has vowed to increase by 10% on imports, and 60% on goods from China, will hurt the growth of Asian economies, especially those that depend on China as their top trading partner.
Prospects of looser regulation and equity-boosting tax cuts in the United States during Trump’s presidency have also boosted the attractiveness of Wall Street assets and the greenback, putting pressure on Asian markets.
“I expect the US dollar to continue to do well, as upside risks continue to dominate in US interest rates. These trends suggest emerging market rates and currencies will under perform,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
Taiwan shares retreated as much as 2% while stocks in South Korea declined up to 1.4%.
Semiconductor stocks have been under pressure after a Reuters report that the United States told Taiwan Semiconductor Manufacturing Co to halt shipments to Chinese customers of advanced chips often used in AI applications. Investors are now awaiting US consumer price data on Wednesday to gauge the outlook for a rate cut in December.
Potentially inflationary tariffs and immigration policies under a Trump presidency have seen market odds of a quarter point Fed interest rate cut on Dec. 18 pared to about 65% from nearly 80% a week ago, according to CME Group’s FedWatch Tool.
Inflation data from India due later in the day and GDP data from Malaysia on Friday are also on investors’ radar.
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