The South Korean won led a pullback in emerging currencies today, rising as much as 0.9% to pare most of its overnight decline.
The Philippine peso, the Thai baht and the South African rand also rose to pull back some of their losses from yesterday.
MSCI’s gauge of emerging market stocks rose 0.1%.
These moves came after mixed messages from Trump yesterday: The president sent letters to a variety of countries setting tariff rates, but also suggested he was open to negotiations.
Trump added that the levies were “firm, but not 100% firm”.
That has left markets playing a now familiar guessing game about how bad the damage could be.
“The ‘firm but not 100%’ headline has opened the way for another round of TACO today Trump style,” said Tony Sycamore, an analyst at IG Markets in Sydney, using an acronym for bets that Trump ultimately backs down from his worst threats.
“Markets remain headline driven so to a large degree it depends on what he says next,” Sycamore said.
Trump began the tariff notifications by announcing his intent to impose 25% levies on goods from Japan and South Korea.
More followed throughout yesterday, with the president outlining plans to tariff foreign goods from trading partners including South Africa, Indonesia, Thailand and Cambodia.
Governments across emerging market countries are still working to secure favourable deals.
Malaysia said it will continue to engage with the US, while Thailand’s finance minister Pichai Chunhavajira said he is optimistic about securing a lower tariff rate than the announced 36% levy.
There are signs investors are seeing local bond markets as a safe place to invest amid the turmoil.
Thailand’s 2028 bond auction today saw strong demand, getting a bid-to-cover ratio of 3.39 times – the highest since March 2021.
Whether currency movements follow a similar pattern to April, when the dollar weakened sharply after a landmark tariff announcement, will depend on which countries are targeted and whether that adds fuel to policy uncertainty, wrote Michael Wan, a senior currency analyst at MUFG in Singapore, in a note.
“This modest reaction is perhaps a function of the market pricing in the ability to negotiate down tariffs, or perhaps a continuation of the TACO trade,” Wan added.