Most Asian currencies strengthened slightly on Monday while the U.S. dollar declined, as investors evaluated the fallout from a recent ruling by the Supreme Court of the United States against an earlier tariff initiative introduced by U.S. President Donald Trump. The court’s decision was followed by Trump’s move to reintroduce tariffs under a separate legal provision.
The U.S. Dollar Index dropped about 0.4% during early Asian trading hours, with futures tracking the index posting similar losses around 05:04 GMT.
In currency markets, the Japanese yen strengthened, with the USD/JPY pair falling roughly 0.5%, supported by demand for traditional safe-haven assets. The South Korean won also gained modestly, as USD/KRW slipped 0.2%, while the offshore Chinese yuan saw the USD/CNH pair ease 0.1%.
The Supreme Court had ruled that the administration’s broad tariffs, enacted using emergency powers, lacked sufficient legal grounding, removing a major component of Trump’s trade strategy. Initially, markets viewed the decision as a potential step toward reduced trade tensions and a supportive sign for global economic growth.
However, Trump responded by announcing a fresh 10% tariff on global imports for a 150-day period under Section 122 of U.S. trade law, later increasing the rate to 15%, which is the highest permitted under that authority.
This development has complicated the outlook for Asian export-driven economies, many of which depend heavily on U.S. consumer demand. Nations including Japan and South Korea, along with several others in the region, had previously secured trade understandings or tariff exemptions with Washington. Regional stock markets showed mixed performance, reflecting uncertainty about how renewed tariffs could affect supply chains and investment flows.
Investor caution was reinforced by recent U.S. data indicating slower economic expansion alongside persistent inflation. The combination has added complexity to the policy path for the Federal Reserve, reducing expectations for significant interest rate cuts in the near term.
Elsewhere in Asia, the Indian rupee traded largely unchanged against the dollar, while the Singapore dollar edged slightly higher. The Australian dollar, meanwhile, posted a modest decline against the U.S. currency.
Frequently Asked Questions
Why did Asian currencies rise at the start of the week?
Many regional currencies gained as the U.S. dollar weakened following legal and policy developments related to U.S. tariffs, which created uncertainty around American trade policy.
What role did the U.S. Supreme Court play in market movements?
The Supreme Court of the United States ruled against the legal basis for earlier sweeping tariffs, prompting investors to reassess trade risks and their potential economic impact.
How did President Donald Trump respond to the court ruling?
Donald Trump announced a new round of tariffs under a different section of U.S. trade law, first at 10% and later increasing them to 15%, sustaining trade uncertainty.
Why are Asian exporters particularly sensitive to these developments?
Many Asian economies rely heavily on exports to the U.S., so changes in tariffs can directly influence growth, corporate earnings, and investor sentiment in the region.
How does recent U.S. economic data affect currency markets?
Slower growth combined with persistent inflation complicates the policy outlook for the Federal Reserve, reducing expectations of near-term rate cuts and influencing global currency movements.
