(Bloomberg) — An indicator tracking emerging market currencies rose Monday as Donald Trump refrained from announcing new trade tariffs as he was sworn in as the 47th president.
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The MSCI EM currency index rose as much as 0.7% during the session, but end-of-day adjustments left it only up 0.3% on the day. The Hungarian forint and the Polish zloty led the advance.
“It seems like a positive reaction to the idea that Trump might not go as heavy on the topic of tariffs,” said Brad Bechtel, head of foreign exchange at Jefferies.
The Mexican peso rose 1.3% against the greenback, which fell 1.1% as liquidity scarcity due to the U.S. holiday exacerbated the moves. The peso briefly pared its gains after Trump pledged to make immigration a priority in his first hours in office, saying he would declare a national emergency at the southern border and send in troops. He also designated Mexican cartels as terrorist organizations.
But there were no details on when and on which countries the tariffs would be imposed.
Trump’s speech “is rather neutral for emerging markets, because he does not mention any details” about his trade policy, said Marco Oviedo, a strategist at XP Investimentos. “The market needs more to assess risk and impact.”
Bloomberg News earlier reported that Trump would not unveil China-specific tariffs on his first day in office because the new administration is starting with potential engagement with Beijing rather than a new trade war. The move, first reported by the Wall Street Journal, could pave the way for trade taxes in the coming weeks or months.
These reports are “good news at the moment,” Oviedo said. “Trump is likely evaluating how best to approach this issue” and “the strategy may be more selective” than previously thought.
Trump’s remarks laid the groundwork for what he intends to be a transformational administration that was elected on the basis of promises to overhaul U.S. policy on immigration, trade, taxes and energy.
“Even though America’s golden age may have begun, it’s still unclear what it will bring to Mexico, and so MXN could continue to experience a wild roller coaster ride over the coming days,” said Bernd Berg, FX strategist at In Touch Capital Markets. .
Emerging European currencies led gains across the region, driven by prospects that Trump will fulfill his promise to quickly end the war in Ukraine. Earlier on Monday, President Vladimir Putin said Russia was ready to begin negotiations with the United States over the war.
