Emerging market currencies rise as focus shifts to negotiations

Emerging market currencies recovered some of their losses after US President Donald Trump signaled he is open to negotiations shortly after setting tariff rates for more than a dozen countries.

The South Korean won led a pullback in Asian currencies, rising around 0.6% to pare part of its overnight decline while the Thai baht erased losses from early morning trading. These moves were part of a tentative rebound across emerging markets, with the South African rand also edging higher after heavy losses Monday.

Trump sent letters to a variety of countries setting tariff rates on Monday but suggested he was open to negotiations, saying that the levies were “firm, but not 100% firm.” That has left markets playing a now familiar guessing game about how bad the damage could be.

“The ‘firm but not 100%’ headline has opened the way for another round of TACO Tuesday Trump style,” said Tony Sycamore, an analyst at IG Markets in Sydney. “Markets remain headline driven so to a large degree it depends on what he says next.”

Trump began the tariff notifications by announcing his intent to impose 25% levies on goods from Japan and South Korea. More followed throughout Monday, with the president outlining plans to tariff foreign goods from trading partners including South Africa, Indonesia, Thailand and Cambodia.

MSCI’s gauge of emerging market equities was little changed on Tuesday morning. South Korea’s stock benchmark Kospi led indexes in the region, rising around 1.5%.