Asian markets risk a reprise of crisis-level stress as two of the region¡¯s most important currencies crumble under the onslaught of relentless dollar strength.
The yuan and yen are both tumbling due to the growing disparity between an uber-hawkish Federal Reserve and dovish policymakers in China and Japan. While other Asian nations are digging deep into foreign-exchange reserves to mitigate the dollar¡¯s damage, the yuan and yen¡¯s slump is making things worse for everyone, threatening the region¡¯s mantle as a preferred destination for risk investors.
¡°The renminbi and yen are big anchors and their weakness risks destabilizing currencies to trade and investments in Asia,¡± said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore, using another name for China¡¯s currency. ¡°We¡¯re already heading toward global financial crisis levels of stress in some aspects, then the next step would be the Asian financial crisis if losses deepen.¡±
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.