HONG KONG: The dollar rose in Asia on Tuesday (May 6), fuelled by hopes for trade deals to avert Donald Trump’s sweeping tariffs, while equities were mixed as investors await the Federal Reserve’s latest policy decision.
Oil also staged a comeback after tanking on news of an output hike by key producers that came despite growing concerns about demand and the outlook for the global economy.
While no agreements have yet been reached with the White House, there is optimism that governments are making progress in averting or tempering the United States president’s eye-watering levies, which have sent shivers through world markets.
Sentiment was given a lift by US Treasury Secretary Scott Bessent, who told CNBC that the administration had been approached by 17 countries and offered “very good” trade proposals.
He also said there could be “substantial progress in the coming weeks” with China, which has been hit with tariffs of 145 per cent.
Trump has imposed lower duties of 10 per cent on goods from most other countries, along with 25 per cent levies on specific items like steel, automobiles and aluminium.
Hopes for deals have seen Asian currencies rally against the dollar, with Taiwan’s unit up around 7 per cent this month, while South Korea’s won, the Malaysian ringgit, Indian rupee and Thai baht have also seen healthy gains.
The greenback was barely moved against the yen, euro and pound.
The gains have led some to speculate governments are allowing for an appreciation of their currencies as part of negotiations with Washington.
“The factor many talk about is whether these countries with historically ‘weak’ and heavily managed currencies are now appealing to Trump through the currency channels and are now allowing for an appreciation of the currency as part of the trade negotiations,” said Pepperstone’s Chris Weston.
“If these Asian nations are indeed opting for a currency revaluation, it could be a significant development not just in driving the dollar lower, but also in the trade negotiation process and accelerate the idea of trade deals.”
Source: CNA
