Asian exporters wary dollar boost gives new US president pretext to beat them

Asian currency policymakers are worried that the strengthening of the dollar on expectations of US President- elect Donald Trump’s fiscal policies could be used by his administration as a stick to beat them with on trade protectionist grounds.

China, Japan, and South Korea are already on the US Treasury’s monitoring list, along with Germany and Switzerland, having met some of the conditions to be labeled a currency manipulator, and they are wary of the criteria being changed to make it easier.

The dollar’s post- election surge, which took it to eightyear highs against China’s yuan and 5- 1/ 2 month highs against Japan’s yen last week, has been driven by views that Trump’s spending and tax plans will lead to higher interest rates.

“Weaker currencies will give an excuse for Trump to blame Asian countries, particularly China, for manipulating exchange rates,” a Japanese official told Reuters.

Asia’s trade surpluses with the US were firmly in Trump’s sights during the election campaign. US government figures show China ran a surplus last year of $ 366 billion, while Japan had a surplus of $ 69 billion and South Korea $ 28 billion.

Donald Trump said he would label China a currency manipulator on his first day in office, allowing him to slap 45 percent across- the- board tariffs on its exports, and accused other Asian countries of unfair trade practices.

“A major shift toward trade protectionism in the US could have a significant impact on Asian economies,” Fitch Ratings said in a report.