3 days ago
Asian currencies retreat after bonds rally; US fiscal, trade concerns persist
Reuters - Asian currencies reversed course to trade lower on Tuesday as a rally in global bonds whipsawed markets that remained concerned about U.S. fiscal health and President Donald Trump's erratic trade policies. The Malaysian ringgit fell 0.3% against a stronger dollaer after reaching a three-week high earlier in the session.
The Singaporean dollar, Indonesian rupiah, and the Indian rupee weakened between 0.2% and 0.4%. U.S. Treasury yields slumped after 30-year bonds mimicked a steep price rally in longer-term Japanese debt and as investors mulled the latest developments in U.S. tariff policy. Trump's policy reversals and his sweeping spending and tax-cut bill have turned investors off U.S. assets. In the latest example, two days after threatening to slap 50% tariffs on imports from the European Union next month, Trump restored a July 9 deadline for talks. "There are three major things driving not just Asia but global markets at the moment: concerns about U.S. debt and deficits, trade deals and the diversification away from the dollar," said Michael Wan, a senior currency analyst at MUFG. "The big picture is that U.S. assets are reasonably over-valued, and there has been a build-up of these assets over time which could impact the general flow of assets moving forward." Asian currencies have benefited from broader weakness in the greenback this month, with the dollar index heading for a fifth straight month of declines against a basket of currencies, which would mark the longest such losing streak since 2017. Taiwan's dollar is on course to log its best monthly performance on record, buoyed by a historic 6% spike over two days in early May. It was last trading flat at 29.939 per dollar. The South Korean won, which has gained more than 4% so far this month, was last down 0.2%. The Thai baht weakened 0.4%. Thailand's commerce ministry has warned that exports in the second half will face a risk of U.S. tariffs after a moratorium expires in July. Meanwhile, the country's finance minister said the tariffs could see the economy stumble, with growth potentially falling to just over 1% this year.
Equities in Bangkok fell as much as 1.6% to a near one-month low. Other regional stock markets were also weaker with shares in Kuala Lumpur, Taipei and Seoul falling between 0.3% and 0.9%. HIGHLIGHTS: ** Thailand's foreign tourist arrivals so far this year fall 2.55% y/y ** China's industrial profits maintain growth momentum in April despite trade tensions ** Asian hedge funds regain lost ground in May, increasing leverage Asia stock indexes and currencies at 0734 GMT Japan -0.54 +9.44 0.51 -5.44 China India -0.35 +0.28 -0.61 5.09 Indonesi -0.28 -1.17 -0.25 1.28 a Malaysia -0.28 +5.70 -0.60 -7.14 Philippi -0.16 +4.71 -0.08 -2.21 nes Singapor -0.19 +6.12 0.27 2.60 e Taiwan -0.02 +9.49 -0.93 -7.37 Thailand -0.37 +4.86 -1.14 -16.80
