Asian Countries Benefit from Fluctuating Currencies

Posted: October 12, 2007 in MISC

Many Asian currencies have risen against the U.S. dollar this year, making exports more expensive and their foreign exchange reserves less valuable. But economists say regional governments should not be too worried about the trend.

The Philippine peso rose to its highest level against the U.S. dollar in seven years this week, while the Singapore dollar hit a 10-year high. In India, the rupee has risen 12 percent this year. The Indonesian rupiah, South Korean won, Taiwan dollar and Thai baht also have strengthened steadily.

Song Seng Wun is a regional economist for CIMB-GK Research in Singapore. He says Asian governments are not taking aggressive measures to stop the trend.

Now, Asia is booming. At the same time, worries about an economic slowdown and the mortgage crisis in the United States, are driving a wave of currency appreciation in Asia. The recent cut in U.S. interest rates also hurt the dollar.

A weaker dollar makes Asian exports more expensive for American consumers. But Song says Asian governments are not too concerned about rising export prices, in part because most regional currencies are in the same situation. That means no one country is being priced out of the market.

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