Asian Currencies Or Third Consecutive Years Of Depreciation

2016 may be the year when Asian currencies depreciated for third consecutive years.

This is the opinion of foreign exchange strategist quoted by Bloomberg.

They believe that in 2016, the rupiah, won and Singapore dollar will be in the top and the India rupees may be the lowest.

According to the strategist, this is the blame for China.

As China's economy slows down, other Asian countries, which have close trade ties with China, have been hit. In August 11th or in the near future, the depreciation of the renminbi has brought downward pressure on other Asian currencies.

Goldman Sachs and JP Morgan both said that the weakness of the renminbi will spread to Asian and other emerging economies.

"So far, the impact of the renminbi on Asian currencies is more than US dollars," said Claudio Piron, joint head of Asia's foreign exchange and interest rate strategy in Singapore, Merrill Lynch.

In the Bloomberg Asian dollar exchange rate index occupies a big weight.

Asia is highly sensitive to the trend of the renminbi, because China is the hub of the region's supply chain to connect the rest of the world.

Now, the pressure of devaluation in some Asian countries is not the same as the Asian financial crisis in the late 90s.

During the 97-98 financial crisis, despite the devaluation of other Asian currencies, the Central Bank of China resisted the pressure on the exchange rate and acted as a "firewall".

We must face the baptism of a new round of exchange rate fluctuations.

This makes other Asian currencies more vulnerable to the issuance of countries, especially those with current-account deficits requiring financing, or countries that have repaid dollar debt pressure when the US dollar appreciates.

Jonathan Cavenagh, head of Asia's foreign exchange strategy at JP Morgan's emerging markets, said that if commodities continue to fall or China's economy is against the wind, others will be

It may face further devaluation pressure.

Bank of America, Merrill Lynch suggested that we should pay close attention to the trend of yen, won, Taiwan dollar and Malaysia's ringgit. Further depreciation of the RMB may cause all currencies to depreciate.

Frederic Neumann, head of Asian economic research at HSBC in Hongkong, believes that if the Yuan's fluctuation increases, the exchange rate of Asian currencies will fluctuate in the next few years.

Claudio Piron and Qiao Hong, a strategist at Merrill Lynch, said in a report that the PBOC supports the RMB exchange rate in reference to a basket of currencies, leaving more room for further devaluation of the renminbi.

The chief investment officer of the Credit Suisse private banking department, the chief investment officer of the Asia Pacific region, expects that the renminbi will be further reduced by 2% to 4% against the US dollar, to 6.6, mainly influenced by the US interest rate increase, the RMB being included in the SDR and the central bank's shift to the real exchange rate based on a basket of currencies.