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Asian currencies to slump on high US tariff exposure

Hong Kong's Birdy Currency Exchange

Southeast Asian currencies opened lower and look set to drop further after Asian emerging nations were given some of the biggest tariff increases by US President Donald Trump.

The Thai baht slipped as much as 0.8% against the dollar, while the Malaysian ringgit and South Korean won also weakened. Equities in the region, which are some of the world’s worst performers this year, are set to extend this year’s losses as the higher tariffs weigh on regional economies.

“The worst-hit region by this tariff announcement is undoubtedly Asian EM,” ING Bank analysts Padhraic Garvey and Francesco Pesole wrote in a client note. Global risk-off should be a common theme, and this should be accompanied by lower market rates, they said.

Southeast Asia was hit particularly hard by the reciprocal tariffs announced by Trump on Wednesday. The US will increase levies on Vietnam’s exports 46%, Thailand’s by 36% and Indonesia’s by 32%. The region’s largest trading partner — China — was heavily targeted, with Beijing now facing a cumulative 54% tariff.

Investors are now awaiting any retaliatory response from tariff recipients, which may further escalate global trade tensions. While nations such as Australia have explicitly ruled out retaliation, investors are watching a response from economies such as China.