Asian currencies: Indonesian rupiah drifts lower
INDONESIA: Emerging Asian currencies fell on Tuesday and stock markets were mixed, as renewed US-China trade tensions weighed on risk sentiment.
The heightened caution in the market follows US President Donald Trump's recent accusations that China violated an agreement to roll back tariffs and trade restrictions – claims Beijing has dismissed as 'groundless'.
Trump and Chinese leader Xi Jinping are likely to speak this week. The call will be closely watched for any developments in the trade negotiations between the world's two biggest economies.
China is a major trading partner for many Southeast Asian countries and the performance of their currencies going forward will be influenced by how the US-China relationship plays out, said Michael Wan, senior currency analyst at MUFG.
'The mood is cautious as it is still quite an uncertain period. A lot will depend on whether we get some sort of a toning down in terms of tariff escalation rhetoric between the US and China,' Wan said.
Also weighing on sentiment was the 50% US tariff on imported steel and aluminum set to take effect on Wednesday, coinciding with the Trump administration's deadline for countries to submit their best trade negotiation offers.
The Indonesian rupiah weakened 0.3%, while the Singapore dollar and the Thai baht both edged down 0.1%. The dollar index was up 0.3% after touching a six-week low earlier in the session.
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