An Inevitable Currency Disaster Is Likely To Happen.

At the beginning of the new year, the devaluation of RMB has been suspended.

A sword on the head.

In the first week of the year, there was a rapid adjustment in the RMB exchange rate. The RMB exchange rate in the inter-bank foreign exchange market dropped to 700 points against the US dollar.

The devaluation of the renminbi has raised global investors' concerns to a new level: the so-called three currencies of the four Asian Dragons - the currencies of Korea, Singapore and Taiwan of China may also depreciate.

If worries come true, global economic growth expectations will be further lowered.

With the rapid development

The slowdown in global economic growth has been expected.

Fragile emerging market economies such as Brazil, Turkey and South Africa have been hit by a strong recent dollar trend and a sharp drop in oil prices and other commodity prices.

Since the middle of 2011, the US dollar has appreciated by 130% against Brazil's real and South African Rand.

The currencies of the more rapidly developing Asian countries (including India) were largely not affected, thanks to their better economic performance and their ability to accumulate large amounts of foreign exchange reserves.

However, in Japan and Mainland China and other manufacturing competitors

At a time of weakness, the currencies of these Asian economies remain strong, leading to a sharp reduction in exports, and exports are the lifeblood of their economies for decades.

Mexico's finance minister Luis Bidegaray's warning confirms these concerns.

Be Pedja Lai said that the mainland's exchange rate policy will enable other countries to follow suit and trigger a new round of currency competitive devaluation.

A currency war in Southeast Asia could slow the region's growth and worrisome worries about the global economy this year and next year.

The Asian financial crisis broke out in Southeast Asia in 1997.

The won and Singapore dollar have fallen by 5%, while NT dollar has fallen by 7% in the past six months.

Even in India, the most promising emerging market of global investors, its currency has fallen by about 7% against the US dollar.

Disappointing export figures in Asia have deepened fears of currency wars.

The above export data are troubling because they not only simply reflect the slowdown in the economy, which has led to the reduction of oil purchases from Nigeria, the purchase of iron ore from Brazil and the purchase of copper from Chile, but also reflects the slowdown of the global economy in a deeper level.

Together with their main competitor, the mainland of China is expected to allow further devaluation of the yuan, the Asian economies will face greater pressure of currency devaluation.

Analysts worried about the sharp drop in exports of manufacturing powers such as South Korea and Singapore, which they see as a sign that the global economic slowdown is worse than expected.

The fluctuation of Asian exchange rate will not leave investors' attention away from other weak currencies.

In addition to common examples such as Turkey, Brazil and South Africa, investors also believe that as commodity prices continue to fall, the currencies of commodity exporters such as Indonesia, Chile and Columbia will also be greatly affected.

The last frontier of exchange rate fluctuations in the Asian market is the fixed exchange rate system linked to the US dollar in Middle East countries, especially Saudi rial.

Rial has a strong correlation with the US dollar.

As oil prices fall, Saudi Arabia's budget deficit is close to 20% of gross domestic product (GDP). Despite this, it still has US $635 billion in foreign exchange reserves to ensure the stability of rial's exchange rate.

If the currencies of Korea, Taiwan and Singapore depreciate, they will face another difficult problem.

As in most emerging market economies, these countries and regions have used billions of dollars in dollar denominated corporate bonds as a capital investment in a historically low interest rate environment.

Foreign investors have been attracted by high-yield and stable exchange rates, buying large amounts of such bonds.

Now Asian currencies are no longer stable, so investors who invest in dollars are not interested anymore.

They will sell these bonds as soon as possible, just as they are selling Brazil, Turkey and South African bonds.

"Investors still have a lot of exposure in these markets," said Blige den, an independent investigative analyst. "I think if the situation worsens further, the market will go into liquidation."