Prince said financial news: The US dollar continues to rise wildly!
Just on Monday (26th), just as the market's concerns about the economy falling into recession heated up, USD index refreshed a 20-year high above 113.
It is worth mentioning that just last week, the US dollar index had appreciated by 2.97%, the largest single-week increase since March 2020, and the highest intraday high reached 113.23, the highest level since May 2002.
As for the future, most analysts believe that the US dollar will remain strong within this year to next year, because the Federal Reserve's interest rate hikes and the economy has led Europe and Japan, and will eventually enhance its financial haven status.
As the US dollar strengthened, there was also a wave of "depreciation" in currencies in Asian countries. Even on Monday, the South Korean won fell below the 1430 mark, and the Japanese yen, RMB and Indian rupee all declined to varying degrees.
So the question is: What should Asian countries do in the face of such a fierce US dollar?
In this regard, on Monday, Masatsugu Asakawa, the president of Asian Development Bank (ADB , ADB ) offered advice!
Asakawa Masatsugu said that if the United States has a rapid rate hike in and the surge in the US dollar may trigger a debt crisis, then capital controls and monetary intervention can be one of the tools used by the central bank in emerging markets in Asia.
The ADB president, who served as Japan's deputy finance minister for international affairs, said that due to violent fluctuations in investment flows, Asian central banks may also need to speed up discussions on how to strengthen the region's financial security network.
Asakawa Masatsugu said: "Although Asia is still far from the outbreak of the crisis, many emerging countries are forced to raise interest rates to prevent capital outflows, at the cost of economic slowdown."
In the view of the ADB president, this time, the Federal Reserve is promoting the normalization of monetary policy very quickly and has caused some turmoil in emerging capital markets. Unless these emerging Asian economies central banks raise interest rates, their own currencies will depreciate, which will cause the scale of huge debt borrowed in the US dollar to expand.
Asakawa Masatsugu believes that as the United States continues to raise interest rates, emerging economies have no choice but to raise interest rates to avoid excessive depreciation of their local currency.
However, Asakawa Masatsugu also said that for the moment, Many emerging Asian economies have enough buffers to survive another crisis because these countries have sufficient current account surplus and foreign exchange reserves, but as a last resort in case of last resort, they can consider using non- monetary policy tools such as capital controls.
Regarding this, Wang Ye said that the previous article of Finance " The Federal Reserve has aggressively raised interest rates, and the US dollar has strengthened, but the history of the Asian financial crisis in 1997 will not happen again? 》 article also reported that Manishi Raychaudhuri, an Asian stock strategist at BNP Paribas , also said that the Asian financial crisis in 1997 is because these emerging Asian countries are financially healthier and have stronger foreign exchange reserves.
Finally, Asakawa Masatsugu said that despite this, Asian central banks must also be prepared, and the violent market fluctuations will undermine the stability of regional economies.
"In the long run, emerging Asian countries can reduce the impact of market volatility on their economy by increasing tax revenue and reducing their dependence on external lending," added Masatsuki Asagawa.
What do you think about this? What do you think will happen next? How should Asian countries respond?
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