Mexican peso sinks, EM Asia currencies drop on Trump's tariffs pledge
Corrects paragraphs 1, 3 and second bullet to say the Mexican peso hovered near its more than two-year low level, not sank to that level
Trump to impose tariffs on Mexico, Canada, China
Mexican peso hover near 2-year low, Canadian dollar hit hard
Thai baht, Indonesian rupiah slump around 0.4%
Most EM Asian stocks decline
By Shivangi Lahiri
Nov 26 (Reuters) -The Mexican peso hovered near its more than two-year low on Tuesday, while Asian currencies also retreated after the U.S. dollar rallied following U.S. President-elect Donald Trump's pledge to slap big tariffs on the country's biggest trading partners.
Trump, who takes office on Jan. 20, 2025, said he would impose a 25% tariff on imports from Canada and Mexico and outlined "an additional 10% tariff, above any additional tariffs" on imports from China.
The Mexican peso MXN= slumped as much as 2.3% and was hovering near its lowest level since August 2022, before easing to trade down 1.7% as of 0745 GMT. The U.S. dollar rose to a four-and-a-half-year high against the Canadian dollar CAD=D3.
In Asia, the greenback rose to its highest level since July 30 against China's yuan CNY=CFXS. However, the biggest losers were the Malaysian ringgit MYR= and Indonesian rupiah IDR=, falling 0.4% each.
The peso had a kneejerk reaction lower but thin liquidity outside the North American time zone may have contributed to the outsized moves in Asia, said Alex Loo, an FX and Macro strategist at TD Securities, Singapore.
The Thai baht THB=TH fell up to 0.4%, with analysts flagging concerns around the export-focussed country's widening trade deficit with China.
Thailand's bilateral goods trade deficit with China has steadily increased to hit $36.7 billion in 2023 from $10.49 billion in 2013.
China is also a leading source of foreign direct investment and tourism receipts for Thailand and Trump's tariffs on Mexico could have implications for goods exported through the Southeast Asian country.
"The authorities will need to strike a delicate balance between protecting domestic firms and jobs and establishing mutually beneficial ties with Chinese firms," Maybank analysts said.
The Singapore dollar SGD= fell as much as 0.4%, a day after data showedthat the country's inflation slowed to a near three-year-low, which could mean the central bank could cut interest rates by as soon as January.
"We reduce our inflation forecasts and shift our base case for MAS (the central bank) policy easing ... to January from April, though this is a close call in terms of timing," Barclays analysts said in a note.
Southeast Asian equity markets were also mostly lower, with stocks in Singapore .STI, Manila .PSI and Indonesia .JKSE losing between 0.3% and 0.6%.
HIGHLIGHTS
** Thailand October car production drops 25.13% y/y
** Thailand's exports beat forecast in October
** Singapore Oct core inflation at 2.1% y/y, lowest in almost 3 years
Asian currencies and stocks as at 0745 GMT | ||||||
COUNTRY | FX RIC | FX DAILY % | FX YTD % | INDEX | STOCKS DAILY % | STOCKS YTD % |
Japan | JPY= | +0.05 | -8.49 | .N225 | -0.87 | 14.32 |
China | CNY=CFXS | -0.17 | -2.19 | .SSEC | -0.12 | 9.57 |
India | INR=IN | -0.01 | -1.29 | .NSEI | -0.23 | 11.21 |
Indonesia | IDR= | -0.41 | -3.36 | .JKSE | -0.63 | -0.06 |
Malaysia | MYR= | -0.36 | +2.82 | .KLSE | 0.46 | 10.32 |
Philippines | PHP= | -0.07 | -6.11 | .PSI | -0.63 | 5.53 |
S.Korea | KRW=KFTC | -0.11 | -8.03 | .KS11 | -0.55 | -5.08 |
Singapore | SGD= | -0.16 | -2.13 | .STI | -0.31 | 14.80 |
Taiwan | TWD=TP | -0.08 | -5.46 | .TWII | -1.17 | 26.48 |
Thailand | THB=TH | -0.37 | -1.71 | .SETI | -0.07 | 1.87 |
Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
Asian stock markets https://tmsnrt.rs/2zpUAr4
Reporting by Shivangi Lahiri in Bengaluru; Editing by Rashmi Aich and Savio D'Souza
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