BENGALURU: Emerging Asian currencies nudged higher on Tuesday, while the Mexican peso slipped after US President Donald Trump refrained from imposing tariffs on his first day in office but signalled potential policy moves in the coming days.
Just as market players cheered the possibility of a delay in tariff implementation following a brief mention of the topic in Trump’s inauguration speech, the US president said that he was mulling imposing 25% tariffs on Mexico and Canada as soon as Feb. 1.
That sent the Mexican peso down 1.5%, while a lack of clarity on immediate tariffs on China supported Asian currencies, although investors remained wary.
Trump’s inaugural policies suggested he will negotiate rather than immediately impose hefty tariffs on trading partners.
“The developments suggest that Trump is indeed serious about raising tariffs, but will take a more considered approach to them,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
“The delay should thereby power a further near-term pullback in the US dollar.”
The ringgit rose 0.3% to its strongest level in nearly three weeks ahead of Bank Negara Malaysia’s (BNM) monetary policy decision on Wednesday. Markets expect the central bank to keep interest rates unchanged at 3.00%.
While the Malaysian economy is expected to post strong growth of 5.1% last year, inflation - 1.8% in November - has remained largely subdued, suggesting BNM will be in no rush to cut rates as it aims to avoid further weakening of the ringgit.
The Kuala Lumpur benchmark stock index advanced 0.3% in its third consecutive session of gains.
Comments
Comments are closed.