Asian export nations wary dollar boost gives Trump pretext to beat them

Sat Nov 19, 2016 9:31pm EST
 
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By Tetsushi Kajimoto and Cynthia Kim

TOKYO/SEOUL (Reuters) - Asian currency policymakers are worried that the strengthening of the dollar on expectations of U.S. President-elect Donald Trump's fiscal policies could be used by his administration as a stick to beat them with on trade protectionist grounds.

China, Japan, South Korea and Taiwan are already on the U.S. Treasury's monitoring list, along with Germany and Switzerland, having met some of the conditions to be labeled a currency manipulator, and are wary of the criteria being changed to make it easier.

The dollar's post-election surge, which has taken it to eight-year highs against China's yuan and 5-1/2 month highs against Japan's yen this week, has been driven by views that Trump's spending and tax plans will lead to higher interest rates.

"Weaker currencies will give an excuse for Trump to blame Asian countries, particularly China, for manipulating exchange rates," a Japanese official with knowledge of currency policy told Reuters.

Asia's trade surpluses with the United States were firmly in Trump's sights during the election campaign. U.S. government data shows China ran a surplus last year of $366 billion, while Japan had a surplus of $69 billion, South Korea $28 billion, and Taiwan $15 billion.

Trump said he would label China a currency manipulator on his first day in office, allowing him to slap 45 percent across-the-board tariffs on its exports, and accused other Asian nations of unfair trade practices.

"A major shift toward trade protectionism in the U.S. could have a significant impact on Asian economies," Fitch Ratings said in a report.

"Disruption to trade between China and the U.S. would have ramifications for the region," Fitch said, adding they expected the new administration would pursue incremental measures, such as raising more trade dispute cases at the World Trade Organization.   Continued...

 
Containers are stacked up at PSA's Tanjong Pagar container terminal in Singapore July 24, 2015.    REUTERS/Edgar Su/File Photo