(Bloomberg) -- The Swiss franc and Scandinavian currencies are among the most vulnerable to the escalating trade war between the U.S. and China.

The franc, Danish krone and Swedish krona are likely to be the worst-affected given that they represent small and open economies even though the nations’ direct trade exposure to China is relatively low, according to Danske Bank A/S. Hungary’s forint looks “particularly vulnerable” among emerging-market exchange rates given its high sensitivity to metal prices.

“The Scandinavian currencies are vulnerable to an escalation of the trade war mostly because they are small, open economies and in Denmark’s case dependent on global shipping activity,” Danske’s Jens Naervig Pedersen said. The Swiss franc “also scores high due to the fact that it is a small open economy, but also with relatively high exposure to the Chinese economy.”

The U.S. introduced a first round of 25 percent tariffs on Chinese goods earlier this month and has since announced plans to impose a 10 percent tariff on consumer products. With China expected to retaliate, the euro and pound could show some resilience to trade tensions, says Danske Bank, due to their larger and less open economies.

The yen and U.S. dollar are among the “least exposed” currencies for these reasons also, coupled with their low correlation to metal prices, the Danske analysts wrote.

--With assistance from Anooja Debnath.

To contact the reporter on this story: Ellen Milligan in London at emilligan11@bloomberg.net

To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net, Keith Jenkins

©2018 Bloomberg L.P.

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