In the second quarter of 2025, Asian currencies rose against the US dollar as markets responded sharply to the trade war. The DXY index, which measures USD performance, fell to a three-year low of 96.20. The Indian rupee, Chinese yuan and Japanese yen all spiked above the greenbacks of the foreign exchange market. Traders who bet on the US dollar made good returns as major local currencies achieved top position in the Forex sector.
The DXY index quickly recovered its value as Trump announced a new 25% tariff in Japan and South Korea. Touching 97.57, it remains on the eco-friendly side of the spectrum since Monday’s trading session. Development shows that Asian currencies are under pressure as they have to deal with price hikes.
Pressure on US dollars to restore value, Asian currencies,
The glorious operation of Asian currencies in the forex market is being challenged by Trump’s recent tariffs. Apart from dealing with tariffs, Asian leaders need to look strong, and they don’t seem to be succumbing to the US. The impact of appearing weak creates their outlook as leaders become immersed in domestic issues.
Phillip Wool, head of portfolio management at Rayliant Global Advisors, predicted that Asian currencies could begin to weaken: “We expect Asian markets under this latest trade threat to fall and currencies to weaken.” He added that Japanese stocks could also decline as it would cost automobile manufacturers to sell cars in the US. “Stocks in the market, especially those with the largest tariff exposure, like Japanese car manufacturers.” He said.
He also emphasized that the market was surprised by why Japan and South Korea didn’t negotiate deals with the US earlier. “In fact, it’s not surprising that countries like Japan and South Korea didn’t cut contracts early. Negotiations take time, as well as there is domestic political pressure that appears to have been threatened by Washington.” He summed it up.
