Investing.com – Most Asian currencies fell slightly on Thursday, extending subdued performances on concerns about new U.S. tariffs under Donald Trump’s administration, while attention turned to the Bank of Japan’s policy meeting to start later in the day.
The BoJ is widely expected to make a hike at the end of its two-day meeting on Friday.
Analysts believe recent inflation and wage data are encouraging and support the central bank’s decision to raise interest rates.
According to media reports, the BoJ is likely to signal further interest rate hikes at its meeting as the economy continues its recovery.
The Japanese yen was largely subdued ahead of the interest rate decision.
Asian currency markets weakened on concerns over US tariffs
Other regional currencies were under pressure amid expectations of further US tariffs.
After his inauguration on Monday, Trump announced plans to impose 10% tariffs on Chinese imports starting February 1 and warned of possible levies on the European Union.
Regional currencies were under downward pressure. Given the region’s heavy reliance on trade with China, these tariffs, if fully implemented, could have a significant impact on most Asian currencies.
The onshore pair of the Chinese yuan gained 0.1% while the offshore pair was broadly unchanged.
The Malaysian ringgit currency pair rose 0.2%, a day after Bank Negara Malaysia held steady for a 10th straight session.
Both the Australian dollar and Singapore dollar currency pairs were largely subdued.
The Indonesian rupiah pair and the Indian rupiah pair each fell 0.1%.
The South Korean won pair traded slightly higher due to the ongoing political crisis in the country.
The US dollar faces headwinds from the gradual imposition of tariffs
The dollar came under pressure as investors assess the economic impact of Trump’s gradual imposition of tariffs.
The greenback fell more than 1% earlier in the week after Trump avoided details on the tariffs, suggesting they might be rolled out more slowly.
Prices were largely subdued during Asian trading after rising a day earlier. 0.1% higher.
“Markets continued to reduce USD long positions as US Treasuries had another strong session, and a delay in announcing tariffs is fueling cautious optimism,” ING analysts said in a recent note.
