Asian currencies rise on US-Mexico trade deal

BENGALURU: Asian currencies edged higher yesterday as global trade tensions eased slightly after an agreement between the United States and Mexico to overhaul the North American Free Trade Agreement (Nafta) boosted risk appetites.

Still, some analysts said the reprieve for regional currencies likely will prove temporary, as the chances the United States and China will resolve their major trade dispute soon is remote.

The dollar index, which measures the greenback’s performance against six other currencies, was nearly flat yesterday following two sessions of losses.

Japanese bank MUFG noted that Canada was not part of the Nafta negotiations “and trade talks with China last week had little progress”.

President Donald Trump “looks to be singling out the countries/economic bloc that he is willing to move forward with his ‘free but fair trade’ agenda such as Mexico, the EU and South Korea. But he is making things difficult for countries like China and Canada,” it said in a note.

The South Korean won led the regional currencies’ gains against the dollar yesterday, rising more than a quarter of a percent, while the Taiwan dollar added 0.15%.

Higher oil prices lifted the Malaysian ringgit, though concerns about foreign investment in a real estate project undermined sentiment.

Prime Minister Tun Dr Mahathir Mohamad on Monday declared that foreigners will not be granted visas to live in the giant Forest City real estate project on the country’s southern tip.

China’s recent move to put a floor under its currency by reviving a “countercyclical factor” in its daily fixing propped up the yuan.

The central bank raised its daily guidance rate for the yuan by the most in nearly 15 months yesterday, though corporate demand for cheaper dollars capped the Chinese currency’s gains in the spot market. – Reuters