Mexican Peso and South African Rand Plummet amid Global Currency Slump
As President Donald Trump imposes tariffs on major trade partners, emerging market currencies have taken a hit, with the Mexican peso and South African rand faring the worst.
Mexico
The peso plunged to its lowest point against the dollar in nearly three years, prompted by retaliation threats from President Claudia Sheinbaum following Trump's 25% levies on Mexico and Canada. Additionally, Trump's accusations of the Mexican government's ties to drug cartels have further escalated tensions.
South Africa
The rand dropped 2% after Trump announced the cessation of US aid due to the nation's land expropriation policies.
Global Impact
The currency sell-off mirrors investor concerns about the potential inflationary effects of US tariffs, which could constrain the Federal Reserve's ability to ease monetary policy. The greenback has also benefited from expectations that the levies will harm foreign economies more than the US, as American demand for higher-priced imports wanes.
Asia
In Asia, the South Korean won and Taiwanese dollar emerged as notable decliners due to their strong trade ties with China. The offshore yuan also experienced a 0.4% dip.
"Asia faces a heightened risk of capital outflows," said Wee Khoon Chong, senior APAC market strategist at BNY. "While domestic fundamentals remain important, the focus in the near term will be on the spillover effects of US tariffs on Mexico, Canada, and China."