Most emerging market currencies and stocks climbed on Tuesday as investors looked past the latest developments in US President Donald Trump’s tariff strategy, betting on more trade deals ahead of the extended deadline.
On Monday, Trump proposed 25 percent tariffs on key trading partners, including Japan, South Korea and Malaysia, escalating tensions that began earlier this year.
The US president sent out letters notifying about a dozen nations of the higher tariffs, while postponing the deadline to August 1 from July 9 earlier, offering a three-week extension for negotiations.
Southeast Asia’s biggest economies are stepping up negotiations with Washington to clinch a deal before the new deadline passes.
The South Korean won and Thailand’s baht recouped Monday’s declines to add 0.6 percent and 0.1 percent, respectively. The Malaysian ringgit lost 0.2 percent.
South Africa saw a recovery in assets, even as the country faces a 30 percent tariff and a potential 10 percent levy threatened by Trump on BRICS nations.
The rand gained 0.4 percent, while stocks added 0.1 percent.
Kazakhstan’s dollar bonds, which slipped on Monday, were little changed. The country was recently slapped with 25 percent tariffs.
“Most of these countries have already offered the US what they needed and even with that, we’ve not seen any huge concessions to tariffs… the wiggle room for further negotiation is not very high,” said Lavanya Venkateswaran, senior economist at OCBC Bank.
However, markets are banking on Trump’s changing tariff stance to allow for more negotiation time, or a walk-back on duties, as was seen earlier this year.
“Singling out certain countries for higher tariffs is a way of putting pressure on these and other countries to agree to a deal sooner rather than later,” Mohit Kumar, chief European economist at Jefferies.
