Most emerging Asian currencies were subdued on Monday, after the United States and China imposed new tariffs on each other’s goods, casting doubt over whether the world’s two largest economies would find a way out of their trade war anytime soon.
On Sunday, the United States began imposing 15 percent tariffs on a variety of Chinese goods – including footwear, smart watches and flat-panel televisions – as China began imposing new duties on US crude oil, in the latest escalation in a bruising trade war.
Also weighing on sentiment, an official reading of the Purchasing Managers’ Index (PMI) on Saturday showed Chinese factory activity shrank in August for a fourth straight month.
However, a private business survey on Monday showed a surprise rise in China’s August factory activity, offering a breath of relief in an otherwise shaky market.
Finding support from the data, the Chinese yuan traded marginally lower at 7.160 against the dollar, while Chinese share markets showed gains.
The yuan had posted its worst monthly decline in 25 years in August, as its currency depreciated amid rising trade tensions.
“The overall perspective does not look good on the global growth front,” Nick Twidale, director & co-founder at brokerage Xchainge said in a note.
“If data continues to move south then expect to see more significant corrections in the equity space, more volatility and more dovish central bankers,” he added.
The Thai baht fell 0.1 percent. Data showed the country’s annual headline consumer price index (CPI) rose 0.52 percent in August from a year earlier, below a Reuters poll forecast. – Reuters