Investors Are Ramping Up Option Bets for Weaker Asian Currencies

President Donald Trump’s US tariff whiplash and the Chinese yuan’s trajectory will likely keep Asian currency volatility elevated.

Currency volatility across the region has jumped ever since the larger-than-expected new US tariffs were announced last week, while foreign currency options signal increased bearishness. Concerns over economic growth have also driven more aggressive bets that regional central banks will cut interest rates. Uncertainty could remain high, even as Trump paused higher tariffs on most economies except China on Wednesday.

With Beijing’s warning of a “resolute” response, investors will be looking out for signs that the yuan will undergo a devaluation, ...