Asia braces for currency wars

Business World as a post on Options limited as Asia braces for currency wars:

The Malaysian ringgit has been trading at a 13-year high against the dollar, but the central bank has said the strength in the currency reflects Malaysia’s robust 9.5% economic growth rate in the first half of the year.
Bank Negara, the Malaysian central bank, said it would only intervene if there were any sudden or excessive movements.

A decision to intervene is not simple for the Reserve Bank of India, despite the rupee reaching over a two-year high against the dollar, as a strong currency is helping the central bank battle rising inflation, officials said.
South Korea is one country that is said by traders to have intervened repeatedly in the currency markets to put the brakes on the won’s rapid ascent.

Thailand’s central bank declined to say whether it intervened in the market after the baht hit a 13-year high against the dollar last week but dealers suspected it might have bought dollars.

In the Philippines, officials have expressed concern over the rise of the peso, but also admitted that the government had limited resources to help exporters deal with the problem.

“Policymakers in smaller Asian countries have to accept that they are powerless in the face of policy decisions made by the G3 (US, Europe and Japan) and China,” said Manu Bhaskaran, head of economic research at consultancy Centennial Group Inc.

Over at ABS-CBN more on the currency war:

Geithner added that the solidarity shown in the wake of the global financial crisis was at risk of disappearing as countries like China fail to reform.

“Our initial achievements are at risk of being undermined by the limited extent of progress toward more domestic demand-led growth,” he said, “and by the extent of foreign exchange intervention as countries with undervalued currencies lean against appreciation.”

European officials have also complained that their exporters were being victimized by an undervalued US dollar and Chinese yuan.

“The euro appears to be too strong today,” said the chairman of eurozone finance ministers, Jean-Claude Junker.

“We are not happy with the current real exchange rate of the Chinese currency.”

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