Trump Fear Fans Dollar Rally As Emerging Markets Sink

HONG KONG, , (UrduPoint / Pakistan Point News - 11th Nov, 2016 ) - The Dollar soared against high-yielding currencies and Asian emerging markets sank Friday on the prospect of higher US interest rates, with dealers betting Donald Trump's planned huge spending policies will fire inflation.

Despite an all-time high close on Wall Street, investors across Asia turned cautious on uncertainties linked to a Trump presidency, while the Mexican peso fell back towards record lows on worries about the firebrand tycoon's anti-Mexico stance.

After an initial shock, global equities rocketed on news Trump had beaten Hillary Clinton, with investors hoping for business-friendly policies and measures to boost the US economy, a key driver of world growth.

However, there are worries about his plans after saying he will tear up several trade deals while ramping up import duties which would stoke inflation.

And expectations that Trump's plans for huge spending projects will also fan prices have lit a fire under the dollar as dealers bet the Federal Reserve will hike borrowing costs more aggressively to cap inflation.

That in turn has led to fears of huge capital outflows from the region as investors go back to the US for better, safer returns. The greenback almost hit 107 Yen for the first time since July in US trade and it maintained most of the gains in Asia, sitting at 106.58 yen -- well up from the 101.20 yen touched in the initial panic of Trump's win.

It also surged against the high-yielding units as dealers worry about Trump's protectionist plans. The Indonesian rupiah plunged more than five percent at one point before halving those losses, Australia's dollar was down 1.3 percent and Malaysia's Ringgit lost 0.8 percent.