ASIAN CURRENCIES’ MINI COMEBACK – FIZZLE, NOT FIREWORKS

Non-Japan Asian (NJA) currencies have staged a mini comeback since mid-May, in line with my expectations that precedent suggested that NJA currencies would stabilise and possibly appreciate gradually after a month of relative weakness (see Asian currencies still on the straight and narrow, 15 May 2015). A GDP-weighted basket of NJA nominal effective exchange rates (NEERs), excluding the CNY, has appreciated about 0.7% since 15 May, according to my estimates (see Figure 1). This reverses over a third of the depreciation recorded in the previous month.

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