Most Asian currencies weakened on Monday as the U.S. dollar strengthened following news of a trade agreement between Washington and Beijing. The Indian rupee, however, stood out with strong gains, lifted by a ceasefire deal between India and Pakistan.
Dollar Strengthens After US-China Trade Talks
The U.S. Dollar Index, which tracks the dollar against major global currencies, rose 0.2% in Asian trading, nearing a one-month high.
The move came after the U.S. and China announced a trade deal following talks in Geneva. Although few details were shared, U.S. Treasury Secretary Scott Bessent described the discussions as showing “substantial progress,” while China’s Vice Premier He Lifeng said an “important consensus” was reached.
Both sides agreed to form a new economic dialogue mechanism, with more information expected later Monday. Investors are hopeful this could lead to a reduction in tariffs between the two countries.
These developments lifted the dollar and pushed down regional currencies.
- The South Korean won weakened 0.6% against the dollar.
- The Japanese yen dropped 0.4%.
- The Malaysian ringgit fell 0.4%.
- The Singapore dollar slipped 0.1%.
- The Australian dollar also declined slightly by 0.2%.
Indian Rupee Rallies on Pakistan Ceasefire
In contrast, the Indian rupee strengthened sharply after India and Pakistan agreed to a ceasefire on Saturday. The agreement followed intense cross-border clashes, the worst in decades.
The ceasefire, brokered by the U.S., appears to be holding. Reports showed a drop in artillery fire and drone activity along the Kashmir border since Sunday.
The Indian rupee rose 0.9%, with the USD/INR pair dropping to 84.621.
Chinese Yuan Steady Amid Mixed Economic Signals
The Chinese yuan edged higher, with the onshore USD/CNY rate falling 0.2% as trade tensions eased.
However, China’s latest inflation data painted a weaker economic picture. Consumer prices fell for a third month in a row in April, and producer prices dropped at their fastest rate in six months. These figures raised concerns about slowing growth in the world’s second-largest economy.
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