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Business/Finance See other Business/Finance Articles Title: Greece debt crisis outcome might fuel currency war in Asia Want... The euro rebounded on news that the Greek government under Prime Minister Alexis Tsipras has agreed to tougher austerity measures demanded by international lenders, but concerns have emerged of a possible currency war in the emerging market. Currencies of emerging markets, which have gone through consolidation in the past three months, have experienced volatility because of the latest developments in Greece. Currencies of the so-called BRICS nations–Brazil, Russia, India, China and South Africa–are expected to weaken further as a result, and the world will be closely watching the movement of the renminbi. The Russian ruble, which has been a "star currency" since the beginning of 2015, made a U-turn after two failed attempts to test the US$1-to-50 ruble level. The ruble is expected to continue consolidation under the US$1-to-60 ruble level and is under pressure to weaken further during the second half of this year. The Brazilian real, meanwhile, has remained weak throughout the year, despite a series of interest rate hikes that pushed the benchmark rate to 13.8%. The real has been hovering at the level of US$1 to 3.20 real, which is near the 2015 low, and institutional investors have forecast the Brazilian real will be weaker than the ruble. The South African rand, which shed 8% against the US dollar during the first half of this year, is expected to weaken further after falling below the level of US$1 to 12.50 rand, while the Indian rupee is already at the lowest level of this year. These developments have led to concerns about a currency war in East Asia, since countries in the region may be forced to weaken their currencies to protect their exports. Although the Chinese central bank has stated that the renminbi is at a relatively reasonable level, China's monetary stimulus measures and its opening up of its capital accounts is likely to create short-term depreciation of the renminbi, leading other countries to weaken their currencies. Japan, South Korea and Taiwan are particularly vulnerable to the slower Chinese economy and a weaker renminbi, due to their reliance on China in terms of their economic development. Japan has been widely expected to be the first country to start to weaken its currency, given the impact of recent developments in Greece on the euro, according to several international institutions. (Bert Lim is president of the Taipei-based World Economics Society. Translated by Want China Times.) Post Comment Private Reply Ignore Thread
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