Column-Asia braces for unwanted, but unavoidable FX battle: McGeever

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Column-Asia braces for unwanted, but unavoidable FX battle: McGeever
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Dark Angel 760k and still delivering | SaltWire #thinkingoutloud #medicalcourier #halifax #carsORLANDO, Florida - Asian countries probably don't want it and they certainly didn't cause it, but a 'beggar thy neighbor' wave of exchange rate depreciation may be about to hit the continent.

While countries may not be actively trying to export their way to prosperity, seismic terms of trade shifts in one tend not to go unmatched. "There is a limit to how much competitive disadvantage countries can take, even if they are not actively looking to gain advantage from currency moves," he adds.Many countries in Asia may be moving closer to those limits, effectively pushed there by some of their G10 peers.

The Swiss National Bank has already broken ranks with the Fed, last month becoming the first G10 central bank to cut rates, while the Bank of Japan's absence from the FX market as the yen plummets is more conspicuous by the day. For its part, even although China's yuan is its strongest in a year on a real effective exchange rate basis now, it is still within sight of last July's decade low.Beijing will want to ensure that any deterioration in bilateral U.S.-China trade amid rising Sino-U.S. tensions and the threat of increased tariffs and trade restrictions is made up for elsewhere, like Europe and other Asian countries.

For example, U.S. imports from China as a share of America's total imports fell 8% over the 2017-23 period, according to Oxford Economics, while the share of imports from Europe, Mexico Vietnam, Taiwan and Korea rose.

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