Despite the volatility in financial markets, Non-Japan Asia (NJA) currencies continue to behave broadly in line with historical patterns. Specifically, a basket of NJA currencies (excluding the renminbi) which was appreciating at about 3% month-on-month versus the USD dollar is now weakening in month-on-month terms, as largely predicted (see Figure 1). The pattern is similar when NJA currencies are measured against trading partner currencies.

In level terms, Asian currencies have been broadly stable in the past couple of months, with the exception of the IDR and KRW which have outperformed. I believe this in part reflects capital flows and the willingness and ability of central banks to stabilise their currencies to support economic growth.

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