BENGALURU: Asian currencies rose against the dollar on Friday as US President Donald Trump’s tariffs on trading partners prompted a rush out of the world’s reserve currency, though stocks remained subdued on lingering tariff concerns.
The US dollar index fell below 100 against a basket of major units for the first time since July 2023 as investors ditched US assets for other safe-havens like the Swiss franc, yen, euro and gold.
Singapore’s dollar firmed to its highest level in more than five months, while Malaysia’s ringgit appreciated by 0.7%. The Philippine peso and Vietnam’s dong
hit a one-week high, while the Indonesian rupiah was largely flat.
Taiwan’s dollar hit an over six-week high, and South Korea’s won edged up. An MSCI index of emerging market currencies touched its best level in a week.
“A broadly weaker dollar amid a trade slowdown makes the monetary policy picture more clear for EM central banks,” said Alex Wolf, head of Asia Investment Strategy at J.P. Morgan Private Bank.
“A weaker USD driven by financial outflows as global investors soured on the US exceptionalism has boosted EM currencies (with a few exceptions), providing central banks more leeway in setting policy.”
On Thursday, the Philippine central bank resumed its easing cycle, cutting its key interest rate by a quarter-point. Next week, Singapore’s central bank is widely expected to reduce the slope of its policy band by at least 50 basis points.
Traders resumed the sell-off in Asian emerging equities a day after a rally prompted by US President Donald Trump’s abrupt announcement of a 90-day pause in hefty import tariffs, though sentiment improved as the day progressed.
Trump’s erratic tariff policies and their potential economic fallout have eroded appetite for risk, with the intensifying trade war with China, Southeast Asia’s largest trade partner, keeping traders on edge.
Stocks in Singapore were last trading 1.7% lower after falling as much as 3%, while those in Malaysia and Thailand were down around 0.4% after falling up to 2%.
Indonesia’s benchmark drifted within a tight range after an early 1.7% drop. Philippine stocks reversed course to trade largely flat.
Most Southeast Asian stock gauges were set to end the week deep in the red.
An MSCI index gauge of Asian emerging market equities reversed course from early losses, boosted by Taiwan’s stocks, which jumped 2.8% after an initial 3% dip.
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