On Wednesday, Singapore’s dollar and Thailand’s baht experienced significant declines among Asian currencies. At the same time, the Mexican peso reached a two-year low due to a surge in the dollar following projections of Donald Trump’s victory in the US presidential election.
The Singapore dollar fell 1.3% to a three-month low, marking its worst session since August 2015. Similarly, Thailand’s baht saw a sharp drop of 1.9% to a two-month low, its most considerable one-day decline since February 2023.
Amid these currency shifts, the dollar was poised for its most significant daily rise against major currencies since March 2020, and US Treasury yields soared to multi-month highs.
Fox News projected Trump’s win over Democrat Kamala Harris, with Republicans securing control of at least one chamber of Congress. Other outlets had not yet confirmed the race at that time.
According to the Exchange Companies Association of Pakistan, the Pakistani rupee remained relatively stable at Rs277.72.
Analysts believe Trump’s tariff and immigration policies could drive inflation, increase bond yields and the dollar, and weaken trading partners’ currencies.
“The market is adjusting positions in anticipation of a Trump victory,” noted Ken Cheung Kin Tai, Mizuho Bank’s chief Asian foreign exchange strategist. He added, “Regional investors are particularly concerned about the tariff impact since most Asian economies are trade-dependent.”
The Chinese yuan and Mexican peso are particularly vulnerable to a stronger dollar and increased tariffs under Trump. The yuan fell by 0.8%, and the peso dropped to 20.7080, its lowest since August 2022.
MUFG analysts suggest that a Trump victory would particularly impact the South Korean won, Singapore dollar, Thai baht, and Malaysian ringgit due to their export-oriented nature and sensitivity to China’s economic shifts.
The ringgit, the top-performing currency in Southeast Asia this year, was down by 1.5%.
Malaysia’s central bank has kept interest rates steady, monitoring the US election to manage market volatility and ensure orderly market conditions.
The Indonesian rupiah decreased by 0.7% to a near three-month low. The central bank governor emphasized focusing on the rupiah’s stability in light of the US election results, stating readiness to intervene if excessive volatility occurs.
Regional stock markets showed mixed responses. Equities in Manila were down by 1.2%, while Taipei and Mumbai saw gains of 0.5% and 0.9%, respectively.
Market Reactions to U.S. Election Outcomes
As Trump claimed victory, investors gravitated towards dollars, bitcoin, and stocks, moving away from bonds. US stock futures reached record highs, the dollar surged, Treasury yields spiked, and bitcoin broke the $75,000 mark—all anticipated movements if Trump defeated Harris.
Matthew Ryan from Ebury noted, “Markets are positioning for a Trump win in the electoral college and the potential for a Republican-controlled Congress.” He highlighted the election’s unique nature and significant implications for tax, trade policies, and US institutions.
Assets likely to benefit from Trump’s promises to increase tariffs, cut taxes, and reduce regulations saw gains while emerging market assets and US Treasury bonds declined in anticipation of a growing deficit.
“Rates are expected to rise,” stated Nick Ferres from Vantage Point Asset Management in Singapore, who was buying shares in Asia-Pacific banks anticipating that higher yields and stronger growth would boost their profits.
Bank stocks in Tokyo and Australia outperformed, with ten-year Treasury yields nearing 4.5%.
Ken Peng from Citi Wealth in Hong Kong suggested, “Investors believe Trump will maintain or cut tax rates. A red sweep could lead to further cuts.”
“Deregulation will benefit the financial, energy, and tech sectors,” he added.
Bitcoin’s value hit a record high, anticipating a softer regulatory stance on cryptocurrencies.
The tariff-sensitive Mexican peso and other sectors vulnerable to trade disruptions suffered declines. The euro and German government bond yields also dropped sharply, indicating concerns about economic slowdowns.
In Hong Kong, exporters’ shares fell, pulling the Hang Seng index down by 2.7%, and investors braced for market instability.
Long-Term Economic Implications and Strategic Adjustments
“With Trump, we expect increased market volatility,” stated Rong Ren Goh from Eastspring Investments in Singapore. He explained that markets were currently focused on tariffs, the most straightforward measure to implement, though broader trade conflicts were possible. “From this perspective, foreign investors are likely to adopt a more defensive stance toward China-focused risks,” he concluded.
Shares of Tesla in Frankfurt and Trump Media and Technology in the US saw significant gains, while the financial community remained cautious, closely watching the ongoing vote count with their networks.4
