TOKYO — The dollar wobbled on Thursday in a turbulent week that saw investor relief at the US-China tariff truce give way to a cautious mood amid uncertainty over the shape of various trade deals, while the South Korean won steadied after sharp moves.
The Asian currency was volatile overnight as investors weighed the news that officials from South Korea and the US met last week to discuss the dollar/won exchange rate.
But a report from Bloomberg that Washington is not negotiating for a weaker dollar as part of tariff talks helped calm the currency markets. Still, concerns that the US administration could push for a weaker dollar is likely to keep investors wary.
The sudden lurch in the won was reminiscent of an unprecedented two-day surge in Taiwan’s currency at the start of May, which coincided with the end of US-Taiwan trade talks in Washington that fuelled speculation of an agreement to weaken the greenback in return for trade concessions.
“Reports of currency discussions between the US and South Korea, coupled with signs the Trump administration may tolerate a weaker dollar, have fuelled won sentiment,” said Kieran Williams, head of Asia FX at InTouch Capital Markets.
“Broader uncertainty around the domestic outlook and trade tensions could temper the won’s upside near term.”
While the dollar has clawed back some of its recent losses against the euro, pound and the yen that were driven by concerns over Trump’s economic policies, it has slipped against most of the emerging market currencies.
The won was last at 1,410.70 per US dollar after a 0.6 percent rise in the previous session. The Mexican peso was last at 19.38 per dollar, hovering near the seven-month high it scaled in the previous session.
