Asia FX muted, dollar nurses losses as Trump tariffs take effect

Investing.com-- Most Asian currencies kept to a tight range on Thursday, while the dollar remained at a more-than one-week low as U.S. President Donald Trump’s trade tariffs began to take effect. 

Trump said his tariffs will take hold from midnight on August 8. The president had on Wednesday hiked his tariffs on India to a cumulative 50%, while also outlining a 100% levy on all semiconductor imports. 

Positive trade data from Australia and China offered regional markets limited relief. 

Dollar at over 1-wk low as Trump tariffs take effect 

The dollar index and dollar index futures moved little in Asian trade, after Trump said his tariffs will take effect from midnight on Wednesday.

His announcement came just minutes before the 00:00 ET (04:00 GMT) deadline, and will see levies ranging from 15% to 50% imposed on most major trading partners.

Several major Asian countries had hashed out trade deals with Washington in the run-up to the tariffs, with Japan and South Korea facing only a 15% levy each.

But markets were now awaiting more details on the trade agreements. Reports on Thursday pointed to some confusion over the interpretation of Trump’s tariffs by Washington and the targeted countries.

The Japanese yen’s USDJPY pair rose 0.1% after reports said Washington intended to add its 15% levy on to already existing tariffs on Japanese goods. This came despite assertions from Japanese officials that the 15% level represented the maximum tariffs imposed on Japanese goods. 

Markets digest Australia, China trade data 

The Chinese yuan’s USDCNY pair fell slightly on Thursday after data showed the country’s trade balance shrank more than expected in July.

But China’s exports surged 7.2%, blowing past expectations as local exporters took advantage of a trade truce with Washington. The softer trade balance was in part driven by an unexpected, 4.1% rise in imports, although the figure also showed some resilience in Chinese demand.

The Australian dollar’s AUDUSD pair rose 0.2%, benefiting from a stronger-than-expected trade balance for June. The figure was driven by a 6% jump in exports, which rebounded sharply from a deep contraction in the prior month. 

Indian rupee steady near record lows after Trump hikes tariffs to 50%

The Indian rupee’s USDINR pair moved little in morning trade, remaining close to record highs of over 88 rupees.

The rupee took some support from the Reserve Bank of India (NSE:BOI) leaving interest rates flat on Wednesday. 

Trump on Wednesday hiked his tariffs on India to a cumulative 50%, citing New Delhi’s continued purchasing of Russian oil. 

But the higher tariffs will only take effect in 21 days, with ANZ analysts noting that the deadline offered India some time to negotiate. 

Still, India will be subject to Trump’s 25% levies from Thursday. 

Among broader Asian currencies, the South Korean won’s USDKRW pair and theSingapore dollar’s USDSGD rose 0.1% each.

The Taiwan dollar’s USDTWD pair fell 0.4%, outpacing its Asian peers after Taipei said chipmaker TSMC (NYSE:TSM), the country’s biggest exporter, will be exempt from U.S. tariffs.