LONDON: Asian currencies fell on Tuesday, led by the Malaysian ringgit and Indonesian rupiah, as dollar strength persisted following U.S. President-elect Donald Trump's tariff threats, while regional stocks rallied on Wall Street's tech performance.
The rupiah was down as much as 0.4 per cent to 15,958 dollar, as of 0339 GMT, its steepest fall since mid-August, while the ringgit weakened 0.3 per cent to its lowest level since Nov. 22.
Trump's tariff threat last week on China, Southeast Asia's largest trading partner, had left investors rattled, driving them away from riskier Asian assets and towards the safety of the dollar.
Federal Reserve Governor Christopher Waller signaled his inclination to support another interest rate cut this month given the projected decline in inflation to 2 per cent, boosting market expectations of a rate cut to 73 per cent.
The dollar index, which tracks the greenback against six major currencies, edged up 0.2 per cent to 106.53, reflecting a nearly 6 per cent increase since early October, when Trump's re-election prospects began influencing markets.
The headline inflation in Indonesia eased in November, providing room for the central bank to consider cutting its policy rates.
Bank Indonesia (BI) cut interest rates in September, just ahead of the U.S. Federal Reserve starting its easing cycle, but since then has held its key rate at 6 per cent.
"In countries such as Indonesia, priority has been placed on currency stability and rate cuts have been postponed despite an economic slowdown, which could have negative impact on the domestic economy," said Ryota Abe, an economist at SMBC.
Analysts are closely monitoring inflation data across Asia this week, with South Korea's November infaltion coming in below expectations, following Indonesia's release on Monday and upcoming reports from the Philippines, Taiwan, and Thailand.
Equities in the region rallied, with technology stocks leading the charge. Shares in Taiwan, South Korean , Japan and Indonesia climbed more than 1 per cent each, taking their cues from record highs hit on Wall Street overnight.
Shares in Singapore rose as much as 1.3 per cent, touching their highest levels since early November 2007.
MSCI's broadest index of Asia-Pacific shares added over 1 per cent, marking its steepest rise since Nov. 12.
Among other Asian currencies, the Thai baht was the only outlier, rising 0.2 per cent. Traders reacted to Finance Minister Pichai Chunhavajira's statement suggesting further rate cuts due to low inflation, ahead of the next policy review on Dec. 18.