Asian currencies slide as Trump's tariff blitz triggers selloff
The won bore the brunt of the selloff, tumbling 0.62 per cent to a two-month low of 1,400.6 against the US dollar, while the ringgit shed 0.5 per cent to hit its weakest level since June 23.
The broad-based retreat extended across the region, with the Philippine peso, Taiwan dollar and Thai baht all declining more than 0.3 per cent as the tariff fallout rippled through Asian markets.
The MSCI emerging market currency gauge has already fallen well over 1 per cent so far this week, snapping from a six month rally in July. It fell over 0.3 per cent on Friday.
Facing a Friday deadline of his making, US President Donald Trump has tapped emergency powers, pressured foreign leaders, and pressed ahead with trade policies that sparked a market sell-off when they were first announced in April.
Taiwan faces a "temporary" 20 per cent US tariff, with President Ching-te Lai and his cabinet saying the government will continue advocating for reasonable rates during final negotiations.
Malaysia secured a 19 per cent US tariff on its exports, down from Washington's previously threatened 25 per cent levy, the White House said. South Korea clinched a deal on Wednesday with reduced 15 per cent tariffs.
Vietnam, Indonesia, the Philippines, Japan, Cambodia and Thailand have already secured agreements. "The tariff announcement brings clarity in form but not in function.
We now have a list of countries and their respective rates, but the logic behind these numbers is far from transparent," said Charu Chanana, Chief Investment Strategist, Saxo, Singapore.
"The sweeping nature of the measures suggests that this isn't a one-time fix but the beginning of a new global trade regime that favours unpredictability over structure."
Meanwhile, the greenback has found support from fading prospects of imminent US rate cuts, with the dollar index up 2.5 per cent this, the highest level in two months. It edged up 0.3 per cent on Friday.
Equities largely inched up higher, with shares in Kuala Lumpur and Jakarta rising 1.1 per cent and 0.9 per cent. While those in Seoul slipped 3 per cent after South Korea's government put forward plans to roll back recently imposed tax cuts.
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The Star
31 minutes ago
- The Star
Tariff respite after the clash
Daily grind: Cambodian factory workers walking out for their lunch break in Phnom Penh. — AFP Thailand and Cambodia welcomed a 19% trade tariff announced by US President Donald Trump, avoiding a threatened levy of 36% days after he intervened to help broker a ceasefire in their deadly border conflict. Cambodia said it would drop all tariffs on imports from the United States and order up to 20 Boeing 737s for its national airline in a further effort to woo the Trump administration. Dozens of countries face steep levies under the tariff regime approved by Trump in Washington on Thursday, set to come into force in a week. He had originally threatened a swingeing 49% tariff on Cambodia as part of his 'Liberation Day' measures aimed at rebalancing world trade in America's favour, but cut it to 36% last month. 'This is the best news for the people and economy of Cambodia to continue to develop the country,' Prime Minister Hun Manet wrote on Facebook yesterday after the 19% levy was announced. The tariff announcement came days after Trump intervened to help broker a ceasefire between Thailand and Cambodia to end border clashes that left more than 40 people dead. Deputy Prime Minister Sun Chanthol told reporters that Cambodia would 'zero out all tariff lines' for the United States – more than 11,000 in total. And he said a 'firm offer' had been made to buy 10 Boeing Max 8s for Air Cambodia, with an option to buy another 10. 'In addition, we'll buy whatever we can – medical equipment, agricultural products – from the United States too, as long as the price is competitive,' he said. Cambodia is a major manufacturer of low-cost clothing for Western brands, with garment products accounting for most of its US$10bil in exports to the United States last year. Many factories in Cambodia are Chinese-owned and the White House has accused the kingdom of allowing Chinese goods to stop over on the way to US markets, thereby skirting steeper rates imposed on Beijing. Thailand had been negotiating with Washington for weeks, seeking a reduction in the threatened 36% levy. 'This finalised deal, setting US import tariffs at 19%, marks a major success for Thailand,' Thai government spokesman Jirayu Huangsab said in a statement. 'It represents a win-win approach aimed at preserving Thailand's export base and long-term economic stability.' — AFP
New Straits Times
2 hours ago
- New Straits Times
Reduced 19pc US tariff fuels hope
KUALA LUMPUR: The United States has lowered its tariffs on imports from Malaysia to 19 per cent, bringing a wave of relief to the country's export-heavy industries and the local stock market. The new rate — a reduction from the original 25 per cent — is on a par with regional neighbours such as Indonesia, the Philippines, Thailand and Cambodia. The White House issued a presidential order dated July 31, outlining broader changes to the US Reciprocal Tariff framework under Executive Order 14257. It saw sweeping revision to the "liberation day" tariffs announced by President Donald Trump in April, reducing or slightly increasing rates on US trading partners. The April announcement saw Malaysia facing a 24 per cent tariff, adjusted to 25 per cent in July, before being reduced to 19 per cent effective Aug 8. This sits above the global baseline of 10 per cent. Industry players welcomed the lower rate, saying it reflects the result of constructive dialogue and engagement between the Malaysian and US governments. The cut may seem modest but it marks a significant boost for Malaysian exporters navigating increasingly competitive and cost-sensitive global supply chains, they added. At Bursa Malaysia, the news prompted a positive market reaction. The stock exchange's benchmark index FTSE Bursa Malaysia KLCI (FBM KLCI) saw an immediate rise as investors quickly priced in the positive impact on Malaysian exporters, particularly in sectors such as semiconductor, palm oil and rubber products. The key index rose 1.33 per cent, gaining 20.10 points to close at 1,533.35, up from Thursday's close of 1,513.25. Following the tariff clarity, the FBM KLCI is expected to trade higher next week, driven by clearer investor outlook. Enhancing Competitiveness While it is still too early to assess the full extent of the impact, several export-oriented industries may benefit from improved competitiveness and increased demand. Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai said the tariff cut enhances the cost competitiveness of Malaysian-manufactured goods in the US market and reflects improved bilateral trade relations. He commended Prime Minister Datuk Seri Anwar Ibrahim's direct engagement with US President Donald Trump as well as the Investment, Trade and Industry Ministry and other relevant agencies for their continued efforts in advocating for the interests of Malaysian industry on the international stage. Malaysian Furniture Council president Desmond Tan said the tariff reduction brings Malaysia's treatment more in line with that of neighbouring Asean nations, helping to preserve its relevance within the regional supply chain. "Hopefully these latest tariffs can reduce uncertainty. However, exporters will still need to adapt to a higher-cost trade environment and continued support from the government remains valuable," Tan told the New Straits Times. Trade talks between the Malaysian and US governments began on May 6 and concluded on July 31, involving multiple platforms of engagement, according to the Investment, Trade and Industry Ministry. The US is Malaysia's largest export market, with trade valued at RM198.65 billion and its largest source of foreign direct investment, with RM32.82 billion in approved investments recorded in 2024. Underlying Risks While the 19 per cent tariff is "less damaging" than the initially proposed 25 per cent, some industry specialists said it still represents a hurdle that will weigh on Malaysia's exports in the global market. Moomoo Malaysia head of dealing Ken Low said the tariff easing is a short-term relief as there remains underlying risks that investors and exporters must navigate in the coming months. "While the tariff reduction is a positive development for Malay-sia's export sectors, it is far from a comprehensive solution," he said. For exporters, particularly in industries like semiconductor, palm oil and medical devices, the 19 per cent tariff could still pressure margins and profitability, Low said. Companies will likely face higher costs for their goods entering the US market, with potential price hikes or margin erosion. Additionally, supply chain disruptions caused by tariffs could delay shipments and reduce overall demand. In the glove sector, Malaysia — which is a major glove producer and exporter — no longer holds a rate advantage over Thailand, Indonesia or Cambodia. But the country's 19 per cent tariff is still lower than Vietnam's 20 per cent and China's 30 per cent, offering marginal competitiveness in the US market, according to CIMB Securities. In 2024, Malaysia held the largest share (about 45 per cent) of the global rubber glove market, followed by China (28 per cent) and Vietnam (10 per cent). CIMB Securities expects some incremental shift in the US glove orders to Malaysia, but higher tariffs will still increase US buyers' cost base, which may limit restocking or lead to leaner inventories.
The Star
2 hours ago
- The Star
U.S. stocks sink on tepid U.S. jobs data, erratic trade policies
NEW YORK, Aug. 1 (Xinhua) -- U.S. stocks tumbled Friday, weighed down by a weaker-than-expected jobs report that signaled a cooling labor market and growing investor unease over the Trump administration's erratic trade policies. The Dow Jones Industrial Average dropped 542.4 points, or 1.23 percent, to 43,588.58. The S&P 500 declined 1.6 percent to 6,238.01, and the Nasdaq Composite slid 2.24 percent to 20,650.13. Losses were broad across the market, with eight of the 11 primary S&P 500 sectors closing lower. Consumer discretionary and technology stocks led the decline, falling 3.59 percent and 2.07 percent, respectively. Health care and consumer staples were among the few bright spots, rising 0.58 percent and 0.53 percent. The U.S. economy added just 73,000 jobs in July, far below the 104,000 forecast. Previous months' job gains were also revised down sharply, and the unemployment rate rose to 4.2 percent from 4.1 percent in June. U.S. President Donald Trump criticized the report as a "mistake," and announced the dismissal of Bureau of Labor Statistics Commissioner Erika McEntarfer. He also renewed criticism of Federal Reserve Chair Jerome Powell. "This is a gamechanger jobs report. The labor market now looks a lot weaker than expected," said Heather Long, chief economist at Navy Federal Credit Union. Bank of America warned that the data raised the risk of "bad cuts" by the Fed on Friday. Markets see a nearly 90 percent chance that the Federal Reserve will cut interest rates in September, according to the CME FedWatch Tool. Markets were also rattled by a sweeping executive order signed by Trump on Thursday, which hiked tariffs on Canadian goods to 35 percent and set "reciprocal" tariffs on dozens of other countries. Tech stocks were hit hard. Amazon dropped 8.27 percent despite posting better-than-expected second-quarter results. Apple declined 2.5 percent, reversing earlier gains after releasing strong earnings. Meta lost about 3 percent, while Nvidia, Microsoft, Alphabet, Broadcom, and Tesla all slid more than 1.5 percent. "Traders are locking in gains as tech earnings fade, macro risks grow, and seasonality turns negative. Breadth is narrowing, valuations are stretched, and defensive positioning is quietly building," said Joseph Cusick, portfolio specialist at Calamos Investments.
