Investing.com-- Most Asian currencies saw a slight rebound on Thursday as the U.S. dollar weakened following President Donald Trump’s announcement of a 25% tariff on automobile imports.
The US Dollar Index, which measures the greenback against a basket of major currencies, fell 0.3% to 104.27 after gaining in the previous session.
The dollar still remained near a three-week high, limiting gains in Asian currencies.
Dollar falls; trade tensions rise on Trump auto tariffs
President Trump on Wednesday announced the imposition of a 25% tariff on all imported automobiles and auto parts not produced within the U.S., effective April 2.
This measure aims to encourage automakers to shift production to domestic facilities and reduce trade deficits.
While tariffs can theoretically bolster the dollar by improving trade balances, the prevailing uncertainty surrounding the administration’s trade policies and concerns that these tariffs might fuel a recession have exerted downward pressure on the currency.
This sentiment was compounded by instances of Trump’s earlier fluctuating decisions and fears of escalating trade conflicts.
Moreover, Trump is set to impose reciprocal tariffs on April 2.
Recent media reports suggested that President Donald Trump might implement a more selective approach to reciprocal tariffs starting next month.
Asia FX edges up as dollar dips; tariff concerns cap gains
Asian currencies were slightly higher after a series of declines. However, gains were limited as investors were cautious ahead of fresh Trump tariffs.
The Chinese yuan’s onshore pair USD/CNY edged down 0.1%, while the offshore pair USD/CNH fell 0.2%.
The Japanese yen’s USD/JPY pair declined 0.3%
The South Korean won’s USD/KRW pair fell 0.3%.
The Singapore dollar’s USD/SGD pair inched down 0.1%, while the Philippine peso’s USD/PHP lost 0.3%.
The Indian rupee’s USD/INR pair ticked down 0.1%.
The Australian dollar’s AUD/USD pair rose 0.2%, a day after cooling inflation data bolstered expectations of rate cuts by the Reserve Bank of Australia.
The Indonesian rupiah’s USD/IDR pair inched 0.1% lower, but remained near its 27-year peak it reached earlier this week.