Asian Currencies Climb as Trump’s Fed Feud Sinks Dollar, Yuan Lags

Asian currencies are riding high as the U.S. dollar slumps to a three-year low, driven by President Donald Trump’s attacks on Federal Reserve Chair Jerome Powell. The Japanese yen, Australian dollar, and others gained ground, while China’s yuan bucked the trend, slipping due to escalating U.S.-China trade tensions. With the dollar index down 1% on Monday, the $6 trillion-a-day forex market is buzzing. Here’s why Asian currencies are in the spotlight.

Dollar’s Slide Lifts Asian FX

The U.S. dollar is under pressure, and Asian currencies are cashing in. The dollar index, which tracks the greenback against major currencies, fell 0.1% to 97.85 in Asian trading on Tuesday, its lowest since March 2022, per Investing.com data. Posts on X highlight a 1% drop on Monday alone, fueled by Trump’s push to overhaul the Fed. “The dollar’s taking a beating, and Asia’s currencies are loving it,” says Priya Lim, a 30-year-old forex trader in Singapore.

The Japanese yen led the charge, with the USD/JPY pair dropping 0.5% to 140.40, per TradingView. The Australian dollar’s AUD/USD pair rose 0.4% to 0.64, a five-year high. The Singapore dollar (USD/SGD) and South Korean won (USD/KRW) each gained 0.1%, while the Indian rupee (USD/INR) edged up 0.1%. These moves reflect a broader rush to rival currencies, with the euro hitting $1.15 and gold soaring to $3,471.70, per Kitco News.

Trump’s Fed Drama Drives Volatility

The dollar’s woes stem from Washington’s chaos. Trump reiterated calls for immediate rate cuts on Monday, slamming Powell as too slow to boost the economy, per X posts. White House adviser Kevin Hassett confirmed the administration is exploring ways to fire Powell, whose term runs through May 2026, according to Reuters. Powell, citing 3.2% U.S. inflation and tariff risks, said last week that rate cuts aren’t imminent, fueling the clash.

This uncertainty is crushing the dollar. “Trump’s threats to the Fed’s independence are spooking investors,” says Hiroshi Tanaka, a currency analyst at Singapore’s Asia Markets Group. A single Trump post moved the dollar index 0.3% last week, per X chatter, and traders expect more volatility. The $180 trillion global forex market is reacting, with safe-haven flows boosting the yen and gold, up 9% this month.

Yuan Slips Amid Trade War Heat

Unlike its Asian peers, China’s yuan is struggling. The onshore USD/CNY pair rose 0.2% to 7.3074, and the offshore USD/CNH climbed 0.3%, per Investing.com. This dip comes despite the People’s Bank of China (PBOC) setting a strong yuan fix at 7.2074 on Monday, 850 pips above market expectations, signaling a push to stabilize the currency, per Bloomberg. “China’s fighting hard, but trade tensions are weighing heavy,” says Tanaka.

The U.S.-China trade war is intensifying. Trump’s 145% tariffs on Chinese goods, matched by Beijing’s retaliatory duties, are hurting sentiment. China’s Ministry of Commerce warned nations against U.S. trade deals that harm Chinese interests, per Reuters. With China’s $18.6 trillion economy facing export challenges—exports fell 4% in Q1 2025, per customs data—the yuan’s outlook is shaky.

Why It Matters

The Asian currency rally reflects a shifting global financial landscape. A weaker dollar lowers U.S. import costs but hurts American exporters, while Asian economies benefit. Japan’s stronger yen supports consumers but pressures exporters like Toyota, with exports making up 20% of its $4.9 trillion GDP, per World Bank data. Australia’s $1.7 trillion economy gains from a robust AUD, though tariff risks loom.

The yuan’s lag signals China’s vulnerability. As the world’s second-largest economy, its $3.5 trillion export sector is critical, and a weaker yuan could spark competitive devaluations, says Tanaka. Businesses are hedging USD/JPY and AUD/USD at current levels, with $30 billion in Asian currency ETF inflows in Q1, per ETF Trends. The ASX 200 and Nikkei 225, up 2% and 1% this month, reflect cautious optimism.

Risks to Watch

The dollar’s weakness may not last. A Trump policy shift or stronger U.S. data—retail sales rose 0.2% in March, per the Commerce Department—could lift the greenback, capping Asian FX gains. The yuan faces pressure from trade war escalation, with support at 7.35, per X traders. Volatility is high, with USD/JPY’s 0.5% daily swing typical, per Forex.com. “Trump’s posts are a wildcard,” says Lim. “One tweet can flip the market.”

Tips for Traders

Watch USD/JPY support at 139.90 and AUD/USD resistance at 0.65. Set stop-losses to manage swings, track X for Trump and PBOC updates, and avoid big bets on the yuan until trade talks clarify. “Stay nimble,” advises Lim. “The dollar’s shaky, but surprises happen.” Secure trading platform data to prevent leaks.

What’s Next?

Asian currencies are thriving on the dollar’s stumble, but the yuan’s weakness highlights trade war risks. With Trump’s Fed battle driving markets, the next move hinges on Washington and Beijing. “It’s a tense time,” says Tanaka. “Asia’s currencies are up, but the yuan’s a warning.” As the forex market braces for more drama, this rally is one to watch.

Got a hot tech tip or insider scoop? Share it with our editorial team at [email protected] – we’d love to hear from you.