New | Asian currencies railroaded by PBOC, Federal Reserve policy decisions
Central banks around the region are stuck on policy tracks effectively set by the Federal Reserve's rate dilemma and Beijing's yuan devaluation
Asian currencies will continue to ride a downbound train, railroaded by China's decision to allow the yuan to devalue and permit more flexibility in the way it trades, and a Federal Reserve which, though mindful of the disinflationary consequences of a weaker yuan, surely cannot leave an impression that US monetary policy is "made in China".
In truth, China's currency moves have elicited a degree of understanding from the Fed and others.
"Obviously, if the Chinese economy is weaker than maybe what the Chinese authorities anticipated, it's probably not inappropriate for the currency to adjust in consequence to that weakness," New York Fed president William Dudley said earlier this month.
Back in March, Asian Development Bank chief economist Wei Shang-Jin said: "It is time to ask whether the [yuan] has become overvalued relative to fundamentals."
Then in its July 7 staff report published on August 14, the International Monetary Fund wrote: "The substantial appreciation of the [yuan] in real effective terms this year has brought the exchange rate to a level that is no longer undervalued."
Yet Beijing's policy moves have not made the Fed's decision, on the timing of a US rate rise, any easier.