Asian currencies fell sharply on Thursday, with the Philippine peso and Taiwan dollar leading the decline as regional economies scrambled to secure US trade deals ahead of President Donald Trump’s August 1 tariff deadline.
The US dollar soared after the Federal Reserve held interest rates steady overnight as expected, but offered less dovish commentary than markets had hoped, adding pressure on regional currencies already strained by trade uncertainty.
The peso slipped nearly 1 percent to a five-month low of 58.371 per dollar and was on track for its worst month since October. The Taiwan dollar fell 0.8 percent to its lowest since June 10, declining for six straight sessions.
Indonesia’s rupiah dropped 0.5 percent to a one-month low, while Malaysia’s ringgit lost 0.6 percent in its fifth consecutive day of losses.
The MSCI emerging market currency gauge was set to snap a six-month rally, losing over 1 percent in July. It fell 0.3 percent on Thursday.
Trade negotiations intensified as the August 1 deadline approached. Trump said on Wednesday South Korea secured a deal with reduced 15 percent tariffs, down from a threatened 25 percent. The agreement came amid a flurry of last-minute negotiations.
Vietnam, Indonesia, the Philippines, Japan, Cambodia and Thailand have already clinched agreements, creating urgency for remaining economies. Malaysia’s prime minister said he expects to learn the country’s tariff rate on Friday after speaking with Trump.
India is still negotiating with Trump after threats of 25 percent tariffs starting on Friday. The Indian rupee fell 0.4 percent to a five-month low with suspected central bank intervention to arrest the decline, while Mumbai stocks dropped 0.7 percent.
Currencies including the rupiah, peso, and the Vietnamese dong are likely to remain under pressure from elevated tariff risks, said Jeff Ng, head of Asia macro strategy at Sumitomo Mitsui Banking Corp.
The Thai baht and ringgit face uncertainty due to unclear trade developments, with significant volatility expected, he said.
Regional equities traded lower, with Manila shares falling 0.8 percent and Kuala Lumpur and Jakarta each losing over 0.4 percent.
