Emerging Asia Economics

Emerging Asia Chart Book
30 September, 2010

Asia’s FX moves are a sensible response to a big problem

Economic growth across Emerging Asia generally eased in July-August while
inflation pressures remain relatively high and will probably bring further
monetary policy tightening in a number of countries soon. Rapid exchange rate
appreciation across the region due to the surge in capital inflows (see table 8 on
page 15) will inevitably bring more interventions into the currency markets in
coming weeks. But the measures will almost certainly be framed to curb the pace
of appreciation and create some two-way moves. A big push to weaken regional
currencies is very unlikely. We continue to expect that regional currencies and
Emerging Asia equity markets will eventually climb further....

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