BENGALURU: Emerging Asian currencies strengthened on Monday as uncertainty over US trade policy kept the dollar under pressure, while regional equities moved higher, spearheaded by gains in South Korea and Taiwan.
MSCI’s emerging market currency index climbed 0.24 percent, hovering just below its record peak hit on February 12. The Malaysian ringgit advanced 0.4 percent, while the Philippine peso rose 0.9 percent to its highest level since late September, as a softer dollar index lent support.
The dollar index weakened after President Donald Trump unveiled a blanket 15 percent import levy in response to a US Supreme Court ruling against his sweeping tariffs.
A 15 percent global tariff rate would be a modest relief for India and ASEAN economies like Malaysia, Thailand, Indonesia, the Philippines and Vietnam, according to analysts at Barclays, though the levy would be higher for Singapore with a present rate of 10 percent.
The Singapore dollar edged up 0.2 percent and the South Korean won, Thai baht and Taiwanese dollar all gained over 0.3 percent.
The narrative in Asian emerging markets has shifted from tariff fears to competitiveness, with supply chains viewed as more diversified than in 2018 and economies tied to AI hardware, capital goods and advanced manufacturing viewed as better positioned than pure export plays, said Billy Leung, investment strategist at Global X ETFs Australia.
Regional equities advanced, with Taiwan’s benchmark touching a record high of 34,212.38 points before closing 0.5 percent higher. Shares of contract chip giant TSMC jumped 1 percent to a record.
South Korea’s KOSPI index, another key beneficiary of advancements in AI, gained 0.7 percent. The benchmark rose 2.1 percent earlier in the day, to hit a record high.
Investors are bracing for earnings later in the week from AI heavyweight Nvidia, which commands almost 8 percent of the S&P 500 and has the heft to move markets.