BENGALURU (Aug 2): Most Asian currencies weakened against the dollar on Thursday as US President Donald Trump raised the stakes in the trade dispute with Beijing with a threat to slap even higher tariffs on Chinese imports.
Trump's administration on Wednesday said the president is seeking to pressurize China by proposing a 25% tariff on US$200 billion worth of Chinese imports, up from an earlier 10% quote.
China's yuan remained under pressure even after the country's central bank set a stronger daily midpoint, at 6.7942 per dollar versus the previous day's 6.8293.
On Wednesday, China's central bank pledged to fine tune monetary policy to guarantee liquidity amid trade tensions.
OCBC analysts said in a note to clients that the latest trade salvo from Washington and China's warning of "counter-measures," will likely continue to weigh on risk appetite in the short term.
The dollar index, a measure of its value against a basket of six major currencies, added 0.1% at 94.757 ahead of jobs data for the world's biggest economy, due on Friday.
Investors are also awaiting Bank of England policy review later on Thursday. However, with a hike mostly priced in, the focus is on the policy statement for any hint of further tightening of borrowing costs.
The Japanese yen, traditionally considered a safe haven currency, advanced 0.2% against the dollar.
Bank of Japan's Deputy Governor said the central bank will purchase government bonds "promptly and appropriately" if yields rise rapidly, after investors teased the limits of the central bank's new intent to allow debt markets to move more freely and sent bond yields to a 1½-year high on Wednesday.
Elsewhere, the Singapore's dollar lost ground for a third straight session, down 0.2% to its weakest level in over one week while the Thai baht inched 0.3% lower.
Malaysia's ringgit and Indonesia's rupiah also weakened 0.2%, each.
India's rupee strengthened slightly after the Reserve Bank of India on Wednesday raised rates for the second consecutive meeting as expected.
Yet, the rupee remains the worst performing Asian currency this year, having declined about 6.6% to date.
Indian policymakers are pursuing a delicate balance as they try to tamp down on inflation without derailing growth.
Rising global crude oil prices are adding to imported inflation pressures. Moreover, recent erratic Indian monsoons muddy the outlook for winter-harvested crops in a largely agriculture-reliant economy — further adding to inflationary pressures.
The following table shows rates for Asian currencies against the dollar at 0506 GMT.
CURRENCIES VS US DOLLAR
|Currency||Latest bid||Previous day||% move|
Change so far in 2018
|Currency||Latest bid||End 2017||% move|