BENGALURU: Asian currencies reversed course to trade lower on Tuesday as a rally in global bonds whipsawed markets that remained concerned about US fiscal health and President Donald Trump’s erratic trade policies.
The Malaysian ringgit fell 0.3% against a stronger dollar after reaching a three-week high earlier in the session.
The Singaporean dollar, Indonesian rupiah, and the Indian rupee weakened between 0.2% and 0.4%.
US Treasury yields slumped after 30-year bonds mimicked a steep price rally in longer-term Japanese debt and as investors mulled the latest developments in US tariff policy.
Trump’s policy reversals and his sweeping spending and tax-cut bill have turned investors off US assets.
In the latest example, two days after threatening to slap 50% tariffs on imports from the European Union next month, Trump restored a July 9 deadline for talks.
“There are three major things driving not just Asia but global markets at the moment: concerns about US debt and deficits, trade deals and the diversification away from the dollar,” said Michael Wan, a senior currency analyst at MUFG.
“The big picture is that US assets are reasonably over-valued, and there has been a build-up of these assets over time which could impact the general flow of assets moving forward.”
Asian currencies have benefited from broader weakness in the greenback this month, with the dollar index heading for a fifth straight month of declines against a basket of currencies, which would mark the longest such losing streak since 2017.
Taiwan’s dollar is on course to log its best monthly performance on record, buoyed by a historic 6% spike over two days in early May.
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