Concerns over tariff commitments hurt Asian currencies again on Monday after U.S. President-elect Trump warned that he would impose 100% tariffs on BRICS countries if they seek to replace the dollar.
BRICS countries include China, India and Russia, Moscow has been seeking to convince the E.U. Creating an alternative currency to the “weaponized” dollar as major companies are hit by U.S. or Western sanctions over the war in Ukraine.
Last month, the E.U. Meet in Kazan, RussiaBRICS currencies were a key topic of discussion, with Moscow proposing a new payments system based on a network of commercial banks interconnected through the central banks of the member countries.
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On Saturday, Trump criticized the move on his social media platform “Truth Social.”
“We ask these countries to make a commitment that they will not create new BRICS currencies or support any other currency to replace the strong US dollar, otherwise they will face 100% tariffs and should be ready to say goodbye to a better world. Products for sale in the United States.
“They can find another 'idiot'. It is impossible for the BRICS countries to replace the U.S. dollar in international trade, and any country that tries to replace the U.S. dollar should wave goodbye to the United States.
Trump's tweets dealt a fresh blow to Asian currencies, which were already in choppy waters last month on concerns about his previous tariff threats.
Chinese yuan fell to four-month low Trump's threats coupled with mixed Purchasing Managers' Index (PMI) data raised concerns that the world's second-largest economy may need additional policy support.
The onshore yuan fell to a low of 7.2675 against the US dollar.
Meanwhile, the Indian Rupee fell to its lowest level on record The exchange rate against the US dollar is 84.7050. Concerns that India's economic growth has slowed to its weakest level in seven quarters weighed on the currency, while Trump's comments led to gains in the dollar.
Any threat of tariffs boosts dollar
Worst hit was the Thai baht, whose value fell 0.7%, its worst day since mid-November. The Malaysian ringgit and Singapore dollar also fell about 0.5%.
The MSCI Emerging Markets Currency Index fell 0.4% in Asian trading, hitting its lowest intraday level since November 14.
At the same time, the U.S. dollar Increased by more than 0.4% The exchange rate against a basket of major currencies is approximately 106.22.
Yeap Jun Rong, market strategist at trading platform IG, said that while Trump's proposed 100% tariffs may be just a warning at the moment, any mention of tariffs could trigger an immediate upward reaction in the dollar.
Meanwhile, analysts at Maybank wrote in a note that “efforts are underway to reduce reliance on the U.S. dollar and it remains to be seen whether Trump can do anything to stem or delay this trend.”
In response to Trump's threats, Kremlin spokesman Dmitry Peskov said on Monday that any attempt by the United States to force countries to use the dollar would be counterproductive.
Peskov said the U.S. dollar is losing its appeal as the reserve currency of many countries and that this trend is accelerating.
China’s official newspaper Global Times also release There were similar comments on social media platform X.
“By threatening the world with tariffs, the United States will inevitably trigger domestic inflation, thereby undermining consumer and investor confidence,” the report said.
“Have American economists calculated this cost?”
- Reuters, with additional editing and input by Vishakha Saxena
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