The weak US dollar, accelerating inflation and the prospect of higher interest rates have pushed Southeast Asian currencies to their highest levels in years, with some hitting levels not seen since the Asian Financial Crisis wrought economic destruction across the region 13 years ago.

Things in most Southeast Asian economies are looking good compared with the fiscal outlook facing the United States, Europe and Japan. Soft US jobs data, a relapse in Greece and the aftermath of Japan’s catastrophic earthquake are just the latest signals of severe international economic malaise there.

asian currencies
The Asian Development Bank (ADB) has also warned Asian governments must keep a tight rein on inflation and may need to consider controls on incoming capital.

With a little help from China’s strengthening yuan, which makes goods out of Southeast Asia cheaper for Chinese buyers, regional currencies are expected to continue gaining over the next 12 months.

As always, currency fluctuations produce mixed results in a well-rounded economy. In Southeast Asia, prices on foreign goods should fall as purchasing power rises in tandem with the local unit, while the cost of locally made products can rise with inflation feeding into the system.

via Upbeat on ASEAN Economies | ASEAN Beat.

Luke Hunt

Luke Hunt

Luke Hunt is a South-east Asia correspondent for The Diplomat and has worked in journalism for more than 25 years. He has served as bureau chief for Agence France-Presse in Cambodia and in Afghanistan during the Taliban occupation where he was commended by the United Nations for the ‘best and most insightful’ coverage of the Afghan civil war.

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