The South Korean won weakened the most among Asian currencies on Tuesday as the deadline for the next round of US tariffs on Chinese imports draws near, while a narrowing trade gap this year buoyed the Philippine peso against the dollar.
The Korean won, the worst performing currency in the region so far this year, weakened 0.3 percent.
US Agriculture Secretary Sonny Perdue said the United States is unlikely to impose extra tariffs, according to a Bloomberg report on Monday. This comes after economic adviser Larry Kudlow’s statement on Friday that the deadline was in place, leaving investors with mixed signals.
Meanwhile, tension has been building over North Korea’s missile launches and the UN Security Council is set to meet on Wednesday, at the request of the United States, to discuss the issue.
“There might be some small bounce in the USD/KRW but we don’t expect a very extended lift,” said Chang Wei Liang, macro strategist (FX and credit) at DBS Bank.
The Philippine peso firmed 0.1 percent. The country’s October imports dropped 10.8 percent from a year earlier. The country’s trade deficit has narrowed 11 percent year-to-date providing support to the peso, according to a note from ING.
“However, increased demand for foreign currency coupled with a projected easing from the Bangko Sentral ng Pilipinas (BSP) in February 2020 will likely see an end to the recent strengthening bias for peso as early as Q1 2020,” the note said.
The Indonesian rupiah pared gains during the session after an official said the central bank was working to further relax lending rules and may trim interest rates more after this year’s four rate cuts.
The Indian rupee INR=IN strengthened for a fifth straight session, firming 0.2 percent.
Meanwhile, most other Asian units traded in a tight range ahead of the tariff deadline as well as policy rate decisions by the US Federal Reserve and the European Central Bank (ECB) later in the week.
The Fed and the ECB are both expected to hold rates steady at their meetings on Wednesday and Thursday, respectively.
Thailand’s financial markets were closed for a holiday. – Reuters