Tariffs and Tensions: The Asian Currency Impacts
The yen fell as Trump reiterated plans for 25% tariffs on Japan and South Korea, while the Aussie surged due to Australia’s central bank holding steady on its cash rate. Investor sentiment was low in Asia, but the South Korean won recovered. Other currencies also gained ground after previous losses.
The yen experienced a broad decline on Tuesday following U.S. President Donald Trump's repeated promise to impose 25% tariffs on goods from Japan and South Korea. This marked a chaotic new phase in the ongoing trade war. Meanwhile, the Australian dollar gained strength after the country's central bank defied expectations and maintained its cash rate at 3.85%.
On Monday, Trump warned major trade partners, including Japan and South Korea, of impending tariffs effective August 1, but signaled possible extensions contingent on fresh proposals. This announcement unsettled investors and led to a somber mood in Asia on Tuesday.
Despite this, South Korea's currency fared better than Japan's yen, appreciating by 0.7% against the dollar. South Korea plans to intensify trade discussions with the U.S. to mitigate these tariff pressures.
(With inputs from agencies.)
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