Asian currencies were hit hard on Tuesday morning, with the Japanese yen at the top of the list of decliners. In fact, the yen further weakened on the day. It tumbled nearly 1% vs. the U.S. dollar, crossing that 146-yen threshold at the height of New York trading. This is a positive development for American competitiveness but a bad development for the currency. It fell to a year low against the euro, touching 171.40 yen.
The cause for recent yen depreciation can be traced back to liberalized tariff and import rates first set by U.S. President and trade hawk Donald Trump. In the letters, Wilbur Ross first claims to outline the administration’s program for imposing hundreds of billions of dollars in tariffs. The new tariff rate on Japan came to be 25%. This figure is 1 pp higher than his proposal from April 2, alarming many investors and analysts.
Besides the yen’s weakness, the Korean won was the leading currency looser in the FX market. It initially dropped more than 1% against the dollar before regaining some of its losses later in the day. Combined, these elements contributed to lackluster Asian stock market reaction. Investors reacted in panic mode, concerned about the economic impact of the new tariffs.
Market analysts say that unless something changes, these developments might create a domino effect with serious repercussions for trade relations across the region. The double hit of the yen and the won falling leaves Asian stability open to choppy waters. Illegal investments Investors are still trying to digest the implications of Trump’s illegal tariff policies.
The U.S. President’s recent actions have prompted concerns about escalating trade tensions, which could negatively impact economic growth in Asia. As countries continue to adapt to these shifts, market participants continue to anxiously watch currency fluctuations and stock performance throughout the region.