Asian emerging markets currencies slipped on Wednesday as the US dollar scaled a two-week high, supported by President Donald Trump’s protectionist measures on imports that have sent countries scrambling to secure a deal by early August.
Trump on Tuesday said no extensions would be granted to the new August 1 deadline for reaching a deal with the United States on tariffs, reversing market optimism and raising uncertainty over issues like trans-shipment tariffs.
“We think the lead-up to 1 August could potentially be noisy due to more trade-related headlines and may create volatility for markets,” said Chetan Seth, equity strategist at Nomura.
“Some tariffs are expected to be in place for all trading partners, which implies that there will be some eventual impact on US inflation, and possibly US and Asian economic growth.”
Governments in Southeast Asia are stepping up negotiations with Washington, with the region among the hardest hit by Trump’s sweeping tariffs, including trans-shipment levies as the US aims to curb China’s trade penetration in the region.
Trade will be the focal point at a meeting of Southeast Asian foreign ministers on Wednesday.
Malaysia’s trade minister, Tengku Zafrul Aziz, at a Reuters event on Wednesday said he was “still optimistic” about reaching a deal with the United States.
Most currencies in Southeast Asia – Malaysia’s ringgit, Thailand’s baht, Indonesia’s rupiah, and Singapore’s dollar – hovered around their two-week lows, while the Philippine peso edged down.
