Most Asian currencies firmed slightly on Tuesday, while the dollar retreated after the U.S. began blockading Iranian ships in a bid to pressure Tehran into a more lasting ceasefire deal.
Focus was also on upcoming U.S. producer inflation data for more cues on interest rates in the world’s biggest economy.
The Chinese yuan firmed after data showed the country’s trade balance and exports vastly missed expectations in March, while import growth blew past expectations. The Singapore dollar was little changed after first-quarter economic growth data missed expectations and the country’s central bank slightly tightened policy.
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Risk appetite was slightly aided by a slew of reports indicating that countries in Asia and the Middle East were attempting to broker more ceasefire talks between the U.S. and Iran.
Dollar stalls as Iran blockade begins; PPI data on tap The dollar index and dollar index futures fell about 0.1% in Asian trade, and were set to decline for seven of the past eight sessions.
The greenback had benefited from increased haven demand in March with the onset of the Iran conflict, but now saw some pullback as markets bet on a potential de-escalation.
The U.S. began blockading Iranian ships and ports on Monday. But President Donald Trump said Tehran had reached out to Washington and wanted a ceasefire deal.
Vice President JD Vance also told Fox News that he saw some progress towards a ceasefire deal, even as weekend peace talks, held in Pakistan, spurred little de-escalation.
The conflict’s inflation impact has been a key point of concern for markets, especially as data last week showed U.S. consumer price index inflation grew sharply in March. Producer price index inflation data for March is due later on Tuesday.
Chinese yuan firms as trade data shows weak exports, surging imports The Chinese yuan’s USD/CNY pair fell 0.2%, after data showed the country’s trade balance shrank substantially more than expected in March.
Chinese exports grew less than expected in March, while imports surged substantially more than expected.
Exports faced some disruptions from the Iran war, as global shipping prices surged through March. Imports, on the other hand, were boosted chiefly by increased local demand for chips and server equipment, especially from South Korea.
Tuesday’s data pointed to some resilience in domestic Chinese demand, in turn driving up hopes that steady growth in imports and prices will help spur more domestic inflation.
Broader Asian currencies mostly firmed. The Singapore dollar’s USD/SGD pair was flat after gross domestic product data for the first quarter read slightly below expectations.
The Monetary Authority of Singapore also tightened policy slightly on Tuesday, raising the upper band of its Singapore Dollar Nominal Effective Exchange Rate.
