Trump Tariffs Spark Asian Currency Plunge

The recent imposition of tariffs by U.S. President Trump has sent shockwaves through the global economy, with Asia bearing the brunt of the impact. The region's trade-sensitive currencies have plummeted to multi-year lows, reflecting the severe economic strain caused by the escalating trade tensions. The South Korean won has depreciated to its lowest level since the global financial crisis, while the Australian and New Zealand dollars have also weakened significantly, falling to levels not seen since March 2020. The Thai baht is on a prolonged decline, the longest since June 2022, while the Indonesian rupiah is nearing historic lows.

Last week, global markets took a hit as traders fled high-risk assets following Trump's announcement of retaliatory tariffs primarily targeting Asia. The subsequent countermeasures by the Chinese government fueled fears that the intensifying trade war could severely impact global economic growth, exacerbating market losses and heightening panic.

The South Korean won has been one of the worst-performing emerging market currencies since late December 2022, when Yoon Suk Yeol attempted to impose a short-lived state of emergency, which quickly failed. The anticipated impact of tariffs on this export-reliant nation has added significant pressure on the won. Despite the recent court decision to remove Yoon Suk Yeol from office, which was initially seen as a potential boost for the won, Trump's persistent push for global tariffs has dampened optimism about avoiding a full-blown trade war.