Asian nations bear brunt of dollar slump

TOKYO – Asia’s small, open economies are caught in the crossfire of a tussle between the United States and China over whether the yuan should strengthen against the dollar to fix the lopsided global economy.

The greenback’s slide against Asian currencies is dealing a double whammy to the region’s export-dependent economies, hitting their exports and eating away at their massive foreign exchange holdings.Some see the dollar’s decline as a necessary adjustment to reduce global trade imbalances. But it has not weakened significantly against the Chinese yuan, whose value is tightly managed by Beijing – to much US criticism.’The West needs to save more, Asia and the Middle East need to spend more, and currencies need to adjust,’ said Standard Chartered chief economist Gerard Lyons.’The big problem is the continued recent stability of the Chinese yuan against the dollar. Yuan stability is forcing many Asian countries to fight to keep their currencies stable to maintain competitiveness,’ he added.The currency issue risks stoking trade tensions when leaders of the 21-member Asia-Pacific Economic Cooperation (Apec) forum meet in Singapore on November 14-15 to discuss the global economy and free trade.The dollar has plunged about 15 per cent against a basket of six other major currencies from a peak earlier this year, and recently hit one-year lows against a batch of regional Asian currencies.US officials ritually express their backing for a ‘strong dollar’ but have done nothing to arrest its slide, which many see as necessary to reduce the big US trade deficit and support struggling American exporters. – Nampa-AFP