Most emerging Asian currencies rose on Tuesday as the dollar remained near a three-year low, after trimming some of its losses on a deal that was struck by the US senators to end the government shutdown. The US House of Representatives passed a short-term measure to fund the federal government through February 8, but the boost from the deal did not last long amid concerns about persistent points of difference between Republicans and Democrats.
The dollar index against a basket of major currencies stood at 90.36, not far from its three-year low touched on January 17. Against the yen, the dollar dipped slightly after the Bank of Japan maintained its policy and its economic and price projections.
"The positive risk sentiment that is carrying over from the US session to the local Asian equity sentiment is benefitting the majority of Asia emerging market currencies," said Stephen Innes, head of trading for Asia Pacific at OANDA. The Taiwan dollar rose as much as 1.1 percent to its highest since January 25, 2013, posting its biggest intraday percentage gain in 11 months. The Indonesian rupiah jumped as much as 0.3 percent, while Malaysia's ringgit climbed 0.2 percent, on track to gain for three straight sessions.
The Indian rupee and the Chinese yuan both rose as much as 0.2 percent, with the yuan rising for a seventh straight session. The Thai baht edged up as much as 0.1 percent, on track to gain for a fifth straight session, to its highest since August 28, 2014. The Philippine peso, on the other hand, dropped as much as 0.5 percent to its lowest in two months.
The Philippine economy grew 6.6 percent in October-December, slightly below market expectations, while full-year gross domestic product growth came in at 6.7 percent, within the government's target. The Korean won also slipped on Tuesday, down as much as 0.2 percent to over a one-week low. "The Trump administration slapped a tariff on cheap solar panels, which has driven the rapid expansion of solar energy. Since a lot of EM Asia economies are predominantly export-driven, this escalation could dampen sentiment," said Innes.
"We saw the immediate markets reactions when both China and (South) Korea took to the airwaves to respond to the unwelcome tariffs." President Donald Trump has approved recommendations to impose safeguard tariffs on imported large residential washing machines and imported solar cells and modules. China is the world's biggest builder of solar photo-voltaic cells and the tariffs will damage Asian companies the most. The country's commerce ministry expressed strong dissatisfaction regarding the tariffs.
South Korea, on the other hand, said the government will complain to the World Trade Organization (WTO) about the US decision on tariffs. The South Korean won slid as much as 0.2 percent on Tuesday to its lowest level since January 11 after the US government approved its tariffs. Trump's tariffs have dealt a heavy blow to shares of South Korea's Samsung Electronics and LG Electronics, who together sell between 2.5 million to 3 million washing machines annually to the United States, making around $1 billion in export earnings. The won has slipped 0.1 percent so far this year.
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