Investing.com – Most Asian currencies fell on Thursday, continuing their weak performance amid concerns about new US tariffs under the Donald Trump administration, while attention turned to the Bank of Japan's policy meeting scheduled to start later in the day.
The Bank of Japan is widely expected to raise interest rates at the end of its two-day meeting on Friday.
Analysts believe that the recent inflation and wages data were encouraging and supported the central bank's decision to raise interest rates.
The Bank of Japan is likely to signal further interest rate hikes at its meeting if the economy continues its recovery, media reports showed.
The Japanese Yen was quite weak before the interest rate decision.
Asian currency markets fell on US tariff concerns
Other regional currencies came under pressure in anticipation of additional US tariffs.
After his inauguration on Monday, Trump signaled plans to impose 10% tariffs on Chinese imports starting February 1, and warned of possible tariffs on the European Union.
Regional currencies faced downward pressure. 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 onshore Chinese yuan pair rose 0.1%, while the offshore pair was largely unchanged.
The Malaysian ringgit pair rose 0.2%, a day after Bank Negara Malaysia was flat for the tenth meeting in a row.
The Australian Dollar and Singapore Dollar pair were largely silent.
The Indonesian rupiah pair and the Indian rupiah pair fell by 0.1% each.
The South Korean won pair was slightly higher amid the ongoing political crisis in the country.
The US dollar faces headwinds due to the gradual imposition of tariffs
The dollar faced pressure as investors assessed the economic consequences of Trump's gradual implementation of tariffs.
The US currency fell more than 1 percent at the beginning of the week after Trump avoided details on tariffs, suggesting they may come at a slower pace.
The pair was largely quiet during Asian trade, after rising the previous day. It rose by 0.1%.
“Markets continued to unwind US dollar long positions as US Treasuries saw another strong session, and delays in tariff announcements are fueling some initial optimism,” ING analysts said in a recent note.
