Risks Of Currency Wars In Asia

The Chinese central bank's devaluation of the renminbi on the 11 day of the month surprised investors and triggered fears that other Asian countries would tend to depreciate their currencies in order to protect exports.

Malaysia's ringgit has fallen 8.7% this month, the worst performance since 1998 due to political scandals, investor confidence and falling commodity prices.

The Indonesian rupiah fell 3.7% this month, the biggest monthly decline in 11 months. With the marketization reform of the RMB exchange rate formation mechanism by the Central Bank of China, the RMB fell by 2.7%, and the implied volatility in one month increased by three times.

As the Vietnamese authorities expanded the exchange rate range of the Vietnam shield in response to the depreciation of the renminbi, and the third time it depreciated in the year, the Vietnamese shield fell 2.9% this month, which is expected to hit the biggest monthly decline since February 2011.

India rupee fell 3.2% this month, NT 2.6%, Thai baht 2.5% and Philippines peso 2.2%.

Credit Suisse's Singapore private banking and wealth management division strategist

"Asian currencies" now have to face the new uncertainty brought about by the more marketization of the RMB exchange rate formation mechanism, and the renminbi will be more volatile.

With the growth of investors' risk aversion, the market sell-off and the pressure of capital flight that Asian countries face are also increasing.

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Thousands of Malaysia people gathered in the capital on weekends.

The prime minister, Najib Razak, was asked to resign over the bribery of the Malaysia Investment Fund (1MDB), despite Najib's denial of bribery charges.

Political scandals and Brent crude oil plunged 22% in the past two months, causing ringgit to plunge 17% this year as the worst performing Asian currency.

As the Indonesian stock market turns to bear, the Indonesian rupiah fell to more than 14000 against a dollar this month for the first time since 1998.

The sale of the Indonesian rupiah forced the government of Indonesia's president Joko Widodo to undertake a "big" stimulus to boost the lowest level since the fourth quarter of 2009.

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As manufacturing data show that the economy is slowing down, the won is heading for a fourth consecutive month of decline, the longest monthly decline since 2008, and has fallen by 1.1% so far this month.

At the same time, the Federal Reserve is preparing for raising interest rates.

Stanley Fischer, the vice chairman of the Federal Reserve, said on Saturday that there is "sufficient reason" to believe that the US inflation rate will stabilize, and that the 2% inflation target of the DPRK will rise, and that interest rates can be gradually increased during the period of low inflation, and that inflation should not be tightened until 2%.

"A weak economy may lead to a decline in the stock market, which will depress the won."

Park Dae Bong, Nonghyup bank's foreign exchange trader, told Bloomberg that "with the anticipation of the Fed's interest rate hike this year, the market is turning to the US dollar."