Investing.com – Most Asian currencies extended losses on Wednesday as investors remained cautious ahead of potential new U.S. tariffs under Donald Trump’s administration, while the Malaysian ringgit jumped on expectations that the central bank would maintain steady interest rates later in the day.
The Bank Negara Malaysia is expected to hold rates steady at 3.00% for the 10th straight meeting on Wednesday due to robust economic growth and controlled inflation, a Reuters poll showed.
The Malaysian ringgit jumped 0.6% against the U.S. dollar, with the USD/MYR pair falling to 4.4465 ringgit as of 03:07 GMT.
Most other regional currencies were under pressure as the dollar was slightly stronger in anticipation of additional U.S. tariffs.
The US Dollar Index rose 0.2% during Asian trading, after losing more than 1% at the start of the week. Dollar Index Futures inched 0.1% higher.
Bank of Japan expected to hike rates this week
The Japanese yen’s USD/JPY pair inched 0.2% higher ahead of the Bank of Japan’s (BoJ) two-day policy meeting starting Thursday.
The BoJ is widely expected to raise interest rates on Friday. Reuters reported last week that the central bank is likely to reiterate its commitment to further rate hikes if the economy maintains its recovery.
“If the BoJ does raise rates, we believe the market will increasingly view another hike as unlikely at least until after the July Upper House elections (our estimate is July),” Bank of America analysts said in a recent note
Tariff fears persist under Trump 2.0
Trump said on Tuesday he is considering imposing 10% tariffs on Chinese imports from February 1, as he raised the possibility of increased duties on several major economies.
Regional currencies faced downward pressure, despite expectations that new tariffs would be implemented gradually. If enacted at their full scale, these tariffs could have a substantial impact on most Asian currencies, given the region's heavy dependence on trade with China.
The Chinese yuan’s offshore pair USD/CNH rose 0.3%, while the onshore pair USD/CNY was largely unchanged on Wednesday.
The Australian dollar’s AUD/USD pair inched 0.2% lower.
The Singapore dollar’s USD/SGD pair rose 0.3%, while the Indian rupee’s USD/INR pair inched 0.1% higher.
The South Korean won’s USD/KRW pair rose 0.4%. South Korea is amid President Yoon Suk Yeol’s impeachment hearing over his attempt to impose martial law in the country.
Elsewhere, the Taiwanese dollar’s USD/TWD pair climbed 0.5%, while the Philippine peso’s USD/PHP gained 0.4%.