Trump’s Tariffs Shake Asian Currencies as Yen Surges on Safe-Haven Demand

Asian currencies tumbled on Thursday following U.S. President Donald Trump’s sweeping trade tariffs, which rattled investor sentiment and fueled fears of a global recession. The Japanese yen was the key exception, strengthening sharply as traders sought safe-haven assets. The USD/JPY pair dropped 1.2%, hitting a three-week low.

The Chinese yuan suffered the most, as China faced the biggest impact from Trump’s new tariffs. The South Korean won and Indian rupee also weakened, with the USD/KRW pair rising 0.3% and USD/INR up 0.1%. Meanwhile, the Australian dollar fell 0.4%, though losses were capped as Australia was hit with only a 10% tariff.

The U.S. dollar also declined, with the dollar index dropping 0.6% and dollar index futures losing 0.7% in Asian trading. While protectionist policies can typically support the greenback, the growing risk of a U.S. recession and expectations of further Federal Reserve easing pressured the currency. Wells Fargo analysts now foresee “considerably more” monetary easing through mid-2025 to mid-2026, though rate cuts may not come immediately.

Market fears were amplified by data showing that Australia’s trade balance had slumped to a near five-year low in February, underscoring the broader impact of Trump’s tariffs. However, the Singapore dollar found support from safe-haven demand, with the USD/SGD pair declining 0.3%.

As global markets react to Trump’s aggressive trade policies, investors remain cautious, weighing the potential long-term effects on economic stability.