Asian Currencies, Stocks Drop on Yuan Devaluation

人民币贬值引发亚太连锁反应
A teller counts yuan banknotes in a bank in Lianyungang, east China's Jiangsu province on August 11, 2015.

VOA News Steve Herman,August 13, 2015

The surprise devaluation of China's currency Tuesday, prompting its biggest single-day drop in a decade, has created a ripple effect through commodities, as well as currencies and stock prices in Asian emerging markets.

After falling 2 percent Tuesday, the yuan's market rate fell another 1.6 percent Wednesday.

China's central bank, which strictly controls the currency, described the move as temporary and meant to make the value of the yuan more market-oriented.

"Looking at the international and domestic economic situation, currently there is no basis for a sustained depreciation trend for the yuan," the bank said Wednesday.

Commodities indexes also declined Wednesday, trading at levels not seen since 2003. Broad indexes of Asian stocks, excluding the Japan market, fell 2 percent, plunging to a two-year low.?

A day after the yuan's trading band was loosened, resulting in about a 5 percent slide of the currency in global trading, Vietnam followed suit and widened the trading band around the dong.

Vietnam's move means "a currency war started almost immediately," said Marshall Gittler, head of Global FX Strategy at IronFX, based in Cyprus.

Domino effect?

Other Asian governments may also be tempted to weaken their currencies to make their goods more attractive.

“If Thailand, Indonesia, Malaysia, Vietnam all decided they were going to win or gain market share by making their currencies significantly cheaper, then it's the averages citizens who pay the cost of that policy decision because they pay more for imported goods,” said Glenn Maguire, chief Asia-Pacific economist at ANZ Bank.

And that added cost to citizens is why many economists, such as Maguire, do not anticipate a currency war in Asia.

In Wednesday currency trading, described as “very jittery” by some traders, Malaysia's ringgit and Indonesia's rupiah were at 17-year lows against the U.S. dollar. The Australian and New Zealand dollars fell to six-year lows.

World reaction

The Chinese central bank's decision to allow the yuan, also known as the renminbi, to significantly weaken is viewed by some analysts as a way for Beijing to export its problems to the rest of the world.

China has been criticized for keeping its currency undervalued to make its exports more competitive.

However, the International Monetary Fund said the devaluation "appears to be a welcome step."

"The exact impact will depend on how the new mechanism is implemented in practice," an IMF spokesman said in a statement. "Greater exchange rate flexibility is important for China as it strives to give market forces a decisive role in the economy and is rapidly integrating into global financial markets."

China would like the yuan to be included in the IMF's basket of traded currencies. Thus, a move to allow it to fluctuate more freely will likely be seen favorably by the IMF ahead of its decision next year on the yuan.

Exports

Worried consumers in Asia watching the currency market gyrations need to bear in mind that there are really two economies in China – one consuming goods from other Asian countries and  China as an assembler of goods with parts coming from other Asian countries.

“That's not really going to change that much,” Maguire told VOA. “What will happen as a result of the move in the yuan is that the cost that companies, say like Samsung or Toyota, pay to assemble goods in China changes marginally. It affects their internal pricing mechanisms and accounts.”

Noting past trends “the adjustment of the renminbi, especially downward adjustments will have a stimulating effect on exports,” Zhang Yuzhong, deputy director of the China commerce ministry's investment promotion agency, told reporters in Beijing on Wednesday.

The volatility for the Chinese currency “will soon start to subside,” predicted Wells Fargo Securities global economist Jay Bryson in a special commentary, forecasting Chinese authorities “would take steps to stabilize the exchange rate well before a generalized rout occurred.”

US reaction

The devaluation of the Chinese yuan received a cautious reaction Tuesday in the U.S., which has long accused Beijing of keeping the value of its currency low to give Chinese exporters an unfair advantage.

U.S. Senator Chuck Schumer, a longtime critic of China's monetary policy, said the move is further evidence Beijing is artificially devaluing its currency.

However, the U.S. Treasury said it is too soon to determine implications of the move.     

The change follows slumping exports and stock market turmoil in the world’s second-largest economy.

Analyst Gus Faucher of PNC Bank said the change in currency exchange policy is likely to “support growth in China.”

William Gallo contributed to this report from Washington.

人民币贬值引发亚太连锁反应

美国之音赫尔曼,2015年8月13日

人民币的意外贬值通过商品市场、货币和股票价格在亚洲新兴市场产生连锁反应。

商品指数和交易额进一步跌至2003年以来未曾有过的水平,除日本股市外,亚洲股市大盘指数星期三暴跌2%,降至两年来的最低点。

人民币交易区间放松一天后,全球货币交易量下降约5%。越南如法炮制,扩大了越南盾的交易区间。

澳新银行亚太区首席经济学家格伦·马圭尔表示,其他亚洲国家政府也可能受到启发,降低本国货币汇率,以使他们的产品更具吸引力。

他说:“如果泰国、印尼、马来西亚、越南都决定通过货币的大幅贬值来赢取贸易份额,那么,为这种政策买单的将是普通民众,因为他们要花更多钱来购买进口商品。”

那样的话会增加普通居民的生活成本。这也是为什么很多经济学家并不预期亚洲会发生一场货币战。但一些分析人士说,越南的行动意味着货币战已经打响。

周三的货币交易被形容为“非常紧张不安”,马来西亚林吉特和印尼卢比对美元汇率都降至17年来的低点。澳大利亚和新西兰货币对美元汇率则下跌至六年来低点。

马奎尔解释道,实际上中国有两个经济体,一个在消费来自亚洲其他国家的商品,另一个在组装来自其他亚洲国家的零部件。

他说:“实际上不会有太大的变化。人民币币值变动的结果就是三星或丰田等公司在中国组装的商品成本变化不大。它会影响这些公司的内部定价机制和账目。“

中国商务部投资促进事务局副局长张玉忠对人民币贬值带来的后果不太担心。他说:“对投资领域和贸易领域造成的影响我估计还不是太明显。人民币币值下调,就像过去历史上发生的情况一样,对外贸出口的刺激还是有的。”

富国证券全球经济学家杰伊·布赖森预计中国当局将采取措施稳定汇率,以防止发生广义上的“崩盘”。