IndiaSphere

By V Anantha Nageswaran
For a while, at least, Asian currencies are caught between rocks and hard places. We struggle to construct realistic scenarios under which Asian currencies rally. Only a credible and reasonably aggressive policy response to the inflationary impulse washing through the region would do that. It would restore policy credibility, improve local currency returns for domestic savers, and slow import growth, thereby acting to restore trade surpluses. The actions of most regional central banks thus far, however, fall short of what is needed.
While exports in some countries have softened of late, the negative impulse from global slowdown remains modest. Policy, however, has for some time been set for a sharp growth slowdown and fears about imminent export slowdown have dominated policy announcements for quite some time. While more recently this has been joined by verbalized concern about inflation, the [...] Read full story