By Ankur Banerjee
SINGAPORE (Reuters) – Global stocks held tight ranges on Tuesday and the dollar clawed back some of its recent losses against Asian counterparts as investors revived concerns about U.S. tariffs and their impact on economic growth.
Those worries coupled with pledges from key oil producers to boost supply also kept crude prices languishing near four-year lows.
The focus in Asia has shifted to currencies following the Taiwan dollar’s surge in recent sessions, which has stoked speculation that a revaluation of regional foreign exchange was on the cards to win U.S. trade concessions.
Its rally suggested a big unwinding is under way and shines a light on one economy among many where years of big trade surpluses have built up large long dollar positions at exporters and insurers that are now under question and on edge.
The heat turned to Hong Kong on Tuesday, where the de facto central bank bought $7.8 billion to stop the local currency from strengthening and breaking its peg to the greenback.
“The real action today is in Asian FX,” said Charu Chanana, chief investment strategist at Saxo in Singapore.
“If these currencies keep strengthening sharply, it could spark fears of a ‘reverse Asian currency crisis’, with potential ripple effects in the bond market amid fears that Asian institutions reassess their unhedged exposure to Treasury holdings.”
On the mainland, China’s yuan strengthened to its highest level since March 20 at 7.23 per dollar.
The Taiwan dollar was last at 30 per U.S. dollar in early trading on Tuesday, not far from the near three-year high of 29.59 it touched on Monday as it jumped 8% over two days. [FRX/]
In stocks, MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.2% lower with Japan closed for a holiday. Taiwan stocks slipped 0.3%.
Chinese markets returned from a holiday with the blue-chip index opening slightly higher. Hong Kong’s Hang Seng was down 0.2%.
Investor attention has been on the possibility of easing trade tensions between the U.S. and China after Beijing last week said it was evaluating an offer from Washington to hold talks over tariffs.
But with few details, uncertainty has reigned with investors left trying to make sense of headlines coming out of the White House.
U.S. President Donald Trump said on Sunday that Washington is meeting with many countries, including China, and that his main priority with China is to secure a fair deal.
Trump also on Monday slapped a 100% tariff on movies produced outside the United States but offered little clarity on how the levies would be implemented.
