Emerging Asian currencies firmed against the dollar on Monday, as investor confidence in the world’s reserve currency weakened on concerns over US President Donald Trump’s plans to shake up the Federal Reserve.
Singapore’s dollar appreciated 0.6% to hit 1.3033 per dollar for the first time in six months, while Thailand’s baht jumped to 33.128 a dollar, just shy of its early October peak.
The Malaysian ringgit touched its best level since late January, while Taiwan’s dollar, Indonesia’s rupiah and the Philippine peso all edged higher. An MSCI index of world EM currencies scaled to its best level seen since last October.
The dollar slumped to its weakest point in three years against a basket of major currencies as Trump administration’s criticism of Fed Chair Jerome Powell and its plans to fire him undermined the central bank’s independence.
That further pressured the greenback, which has been trading at multi-year lows against other major currencies and has lost more than 5% so far this month, as Trump’s ever-changing tariff policies undermine faith in US assets.
“The perception that strong US institutions are now under threat from the incumbent could be exacerbating the sell-off of the US assets this morning, allowing the dollar index to test new lows not seen since 2022,” said analysts at Maybank.
In Thailand, the baht resumed its uptrend after a brief retreat late last week.
The currency was last trading a few pips below its mid-October high point, fuelled by a surge in gold prices. Stocks slipped 0.5%.
Asian currencies pressured by trade war tensions
Thailand, a regional gold trading hub and Southeast Asia’s second-largest economy, is set to enter trade negotiations with the US on April 23, as per local media.
Singapore’s Straits Times Index rose 1%, marking its fifth consecutive session of gains, driven by strength in banking stocks.
Meanwhile, the Indonesian rupiah nudged 0.1% higher but hovered near its all-time low of 16,970 per dollar, as the benchmark index dipped slightly.
Bank Indonesia (BI) is set announce its interest rate decision on Wednesday and widely expected to keep policy unchanged.
Michael Wan, a senior currency analyst at MUFG, said the central bank was expected to “remain on hold for now given the volatile rupiah”.
“We think the BI ultimately remains dovish and should cut rates at some point this year, but IDR weakness is constraining the central bank at this point in time,” Wan wrote.
Indonesia, Southeast Asia’s largest economy, has agreed with the United States to aim for concluding talks on investment and trade partnerships within the next 60 days.
Equity markets in emerging Asia traded in varied directions, with Singapore’s benchmark index rising 1.5%, while Jakarta and Kuala Lumpur each slipped 0.2%.
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