JAKARTA (Reuters): Mexico's peso slipped to around a two-year low on Tuesday, after US President-elect Donald Trump vowed to impose additional tariffs on its southern neighbour as well as Canada and China, while the dollar gained against most Asian currencies.
The Mexican peso slumped as much as 2.3% to near its lowest level since August 2022, before paring some losses to trade down 1.2%.
"Whilst the market maybe cautious of the risk that Trump maybe incrementally introducing the tariffs, we do note the possibility that the final imposition may not be quite the same as what was proposed by him," analysts at Maybank said.
Trump would impose additional 10% tariffs on exports from China, and 25% tariffs on all exports from Mexico and Canada, he said in a post on Truth Social network on Monday.
The Canadian dollar dropped as much as 1.4% to a four-year low, while China's yuan fell 0.1%, its lowest since July.
The US dollar erased a huge chunk of Monday's losses after Wall Street veteran Scott Bessent being picked as Trump's Treasury Secretary choice was seen as a positive move for those looking for a more phased tariff stance.
Trump's comments on Monday are sharply against anticipations that he might tone down his trade policies during a second term, and if imposed, would do a lot of harm to Mexico's automobile industries and to parts of the country which supply various products including electronics to the US.
In emerging Asia, the Thai baht slipped as much as 0.4% and the Indonesian rupiah fell 0.4%, prompting the latter's central bank to reassure market participants that it would work to stabilise the currency.
Expectations of a more gradual easing in interest rates by the US Federal Reserve and Trump's tariff plans have led to rising market volatility, a top official at Bank Indonesia said.
Equity markets in Asian developing countries were mostly mixed, with chip-heavy shares emerging as major losers, while Wall Street futures pointed towards a lower start later in the day.
Shares in South Korea and Taiwan dragged 0.7% and 0.8%, respectively. The Philippine stock market was trading flat, while shares in Malaysia and Thailand rose 0.6% and 0.3%, respectively. - Reuters
