Asian shares fell on Tuesday following President Donald Trump’s shock dismissal of Federal Reserve Governor Lisa Cook, sparking fresh concerns about political interference in US monetary policy and sending currencies sliding across the board.
Manila shares bore the brunt of the selloff, tumbling more than 2 percent to their lowest level since April 23. Stocks in Kuala Lumpur and Seoul shed nearly 1 percent, each, while Singapore, Bangkok, and Mumbai retreated more than 0.5 percent each.
A gauge of emerging Asian equities fell 1 percent, snapping a three-session rally. The index notched a near four-year high in the previous session.
Currency markets mirrored the equity weakness. The Philippine peso and South Korean won led declines, each slipping 0.5 percent against the dollar, while the Malaysian ringgit, Indian rupee and Indonesian rupiah each lost more than 0.2 percent.
The turmoil stemmed from Trump’s unprecedented decision to fire Lisa Cook over alleged mortgage impropriety, a move that deepened concerns about political interference in monetary policy. The US dollar index retreated 0.2 percent after Monday’s 0.7 percent surge.
The dollar’s retreat reflects concerns that reshaping the Fed could favour more dovish policy, though sustained weakening likely requires disappointing US data this week including economic growth and inflation readings, according to Christopher Wong, a currency strategist at OCBC.
“But over the course of the next few weeks, if growth fears are proved to be misplaced and when Fed pivots and markets get better clarity of Fed’s guidance of rate cuts, USD softness may return and selectively, some Asian FX including won, ringgit could strengthen.”
Later in the day, the US will release the Conference Board Consumer Confidence Durables goods orders for July. The US Personal Consumption Expenditures prices reading, due on Friday, is considered the Fed’s preferred inflation gauge.
