Most Asian currencies remained subdued on Tuesday as the dollar steadied after four consecutive gains, while the Indonesian rupiah tumbled to its lowest level since the 1998 Asian financial crisis, weighed down by concerns over the country’s fiscal stability and economic growth.
The US Dollar Index, which measures the greenback against a basket of major currencies, was largely steady at 104.29.
The index hovered near a three-week hight and has gained in the last four consecutive sessions.
Asia FX under pressure as dollar remains firm; impending Trump tariffs in focus
“The dollar found some support last week after a very weak start to March,” ING analysts said in a note.
“The Federal Reserve’s reiterated cautiousness on rate cuts has likely prevented further bearish sentiment from accumulating on the dollar, but we think it’s mostly the upcoming 2 April US tariff implementation that is forcing some rethink about short-USD trades,” they added.
With the strengthening dollar, and potential risks from upcoming U.S. trade tariffs, Asian currencies remained subdued.
However, media reports over the weekend suggested that President Donald Trump plans to implement a more selective approach to reciprocal tariffs starting next month.
Instead of broad industry-wide levies, Trump’s administration is expected to focus on countries with significant trade imbalances with the U.S.
With trade-sensitive currencies already under pressure, investors are bracing for potential volatility as details of the policy emerge.
The Chinese yuan’s both onshore USD/CNY and offshore USD/CNH pairs, inched 0.1% higher.
The South Korean won’s USD/KRW ticked up 0.2%.
The Japanese yen’s USD/JPY pair edged 0.1% lower.
The Singapore dollar’s USD/SGD pair, and the Australian dollar’s AUD/USD pair, were both largely muted.
The Indian rupee’s USD/INR pair was trading 0.1% higher.
Indonesian rupiah sinks to 1998 crisis levels
The Indonesian rupiah depreciated to levels not seen since the 1998 Asian financial crisis amid concerns about the nation’s fiscal stability and economic growth.
The rupiah’s USD/IDR pair jumped as much as 0.7% to 16,654.6 rupiah, after gaining nearly 1% last week.
Bank Indonesia (BI) attributed this to a combination of global uncertainties and domestic challenges, Reuters reported.
These include U.S. President Donald Trump’s tariff policies, ongoing geopolitical tensions, and the broader impact of trade disputes on China and other emerging Asian markets.
Domestically, investor apprehensions have intensified due to President Prabowo Subianto’s expansive fiscal initiatives, which have led to significant budget cuts in essential sectors like education and public works.
The country’s stock market has also seen continuous sharp falls this month.
In response to the rupiah’s decline, Bank Indonesia has intervened in the foreign exchange market to stabilize the currency.
