**Asian Currencies Gain as U.S. Dollar Weakens Amid Trade Concerns**

In the latest trading session, Asian currencies saw an upward trend on Friday as the U.S. dollar hovered near six-month lows. This decline in the greenback is largely a result of growing anxieties surrounding President Donald Trump’s recent proposals for extensive tariffs, which are raising fears of a potential global economic recession.

Despite an initial drop following the tariffs announcement, Asian currencies closed positively on Thursday, reflecting a broader sentiment shift in the market.

**Dollar Decline Tied to Economic Uncertainty**

The U.S. Dollar Index, which evaluates the dollar against a selection of major currencies, lost 0.4% during Asian trading hours on Friday after plummeting nearly 2% to a six-month low the previous day. This downturn comes on the heels of President Trump’s declaration of a universal 10% tariff on all imports, alongside aggressive levies targeting certain nations, including a staggering 54% on goods imported from China.

The announcement prompted a considerable selloff in U.S. equities, with major indices experiencing their most significant declines in months. Investors fled to safe-haven assets, resulting in lower U.S. Treasury yields and a further strain on the dollar.

Market analysts express concerns that these trade tensions could stifle corporate investment, hamper global economic growth, and add to inflationary pressures. “The repercussions of U.S. tariffs on the domestic economy leave the dollar exposed. Lower U.S. rates continue to dominate, and the dollar may only find support if we receive unexpectedly positive news on tax reforms or regulatory changes from the U.S.,” noted ING analysts.

**Japanese Yen and Chinese Yuan Strengthen**

The Japanese yen continued to perform well against the dollar, with the USD/JPY pair dropping 0.5% on Friday, following a notable 2% decrease to a six-month low the day before. Meanwhile, the offshore Chinese yuan demonstrated a steady trend, with the USD/CNH pair declining by 0.4%, although onshore markets remained closed for a public holiday.

Additionally, the South Korean won also saw appreciation, with the USD/KRW pair falling by 0.9%. The Singapore dollar remained largely stable against the dollar, and the Taiwanese dollar recorded a slight loss of 0.5%. The Indian rupee similarly edged down against the dollar by 0.4%.

**Australian Dollar Faces Pressure from Rate-Cut Speculations**

Notably, the Australian dollar faced downward pressure, with the AUD/USD pair dropping by 1.5%. Traders are increasingly anticipating that the Reserve Bank of Australia (RBA) may consider cutting interest rates in response to Trump’s tariff escalation, which has heightened fears of a global economic slowdown affecting Australian exports like iron ore and coal.

With uncertainties rife in the markets, traders are advised to remain vigilant and closely monitor developments in U.S.-China trade relations, as these factors will likely influence forex movements and overall market sentiment in the coming weeks. Balancing risk and opportunity will be crucial as market dynamics evolve.

Image from AFP via FMT licensed under CC BY 4.0