Investing.com– Most Asian currencies weakened on Monday while the dollar firmed after U.S. President Donald Trump said he will impose tariffs on metal imports, with the Japanese yen falling the most among its peers.
The Chinese yuan also weakened as January inflation data underwhelmed, pointing to little improvement in the country’s persistent deflationary trend.
The dollar firmed in Asian trade, recouping all of last week’s losses as markets braced for more protectionist measures from Trump. The U.S. president also said he will impose reciprocal tariffs on major trading partners.
Trump had last week imposed a 10% duty on China, drawing ire and retaliation from Beijing. This kept sentiment towards regional markets weak, as traders braced for a renewed global trade war.
Trump announces 25% tariffs on steel, aluminum; dollar firms
The dollar index and dollar index futures both rose 0.3% in Asian trade, recouping all of their losses from last week.
The greenback was boosted by Trump stating that he will impose 25% tariffs on all U.S. imports of aluminum and steel- a move that stands to impact South Korea and Japan the most.
Trump also reiterated plans to bring import duties in line with those charged by major U.S. trading partners on U.S. exports. The European Union has been a major target of his criticism over unfair trade duties.
Trump’s comments boosted the dollar, as traders bet that the tariffs- which will be borne by U.S. importers- will underpin domestic inflation.
Analysts and Federal Reserve officials have warned that tariff-related inflation could keep interest rates high in the long term.
