Investing.com – Most Asian currencies extended losses on Wednesday as investors remained cautious ahead of possible new US tariffs under the Donald Trump administration, while the Malaysian ringgit jumped on expectations that the central bank will maintain steady interest rates later in the day.
A Reuters poll showed that the Federal Reserve is expected to keep interest rates steady at 3.00% for the tenth consecutive meeting on Wednesday due to strong economic growth and controlling inflation.
The Malaysian ringgit jumped 0.6% against the US dollar, with the pair falling to 4.4465 ringgit as of 03:07 GMT.
Most other regional currencies came under pressure as the dollar was slightly stronger in anticipation of additional US tariffs.
It rose by 0.2% during Asian trading, after losing more than 1% at the beginning of the week. It rose by 0.1%.
The Bank of Japan is expected to raise interest rates this week
The Japanese yen pair rose 0.2% ahead of the Bank of Japan's two-day monetary policy meeting that begins on Thursday.
The Bank of Japan 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 raise interest rates if the economy continues to recover.
“If the Bank of Japan raises rates, we believe the market will increasingly view another rate hike as unlikely at least until after the Senate elections in July (our estimate is July),” Bank of America analysts said in a recent note.
Concerns about tariffs remain under Trump 2.0
Trump said on Tuesday that he was considering imposing 10% tariffs on Chinese imports starting February 1, as he raised the possibility of increasing tariffs on several major economies.
Regional currencies faced downward pressure, despite expectations that the new tariffs would be implemented gradually. If these tariffs were applied to their full extent, they could have a significant impact on most Asian currencies, given the region's heavy reliance on trade with China.
The offshore Chinese yuan pair rose 0.3%, while the onshore pair was largely unchanged on Wednesday.
The Australian dollar pair fell by 0.2%.
The Singapore dollar pair rose by 0.3%, while the Indian rupee pair rose by 0.1%.
The South Korean won pair rose by 0.4%. South Korea is witnessing an impeachment hearing for President Yeon Suk-yeol over his attempt to impose martial law in the country.
Elsewhere, the Taiwan dollar rose 0.5%, while the Philippine peso rose 0.4%.
