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On the global monetary battlefield, the dollar's influence seems to have reached a state of near-starvation.
In the latest financial tussle, the dollar appears to have targeted two of Asia's economic powerhouses, Japan and China.
This seemingly sudden financial storm has long been foreshadowed.
The role of the US dollar in the global economy has always been complex and volatile, and the recent moves have triggered a series of ripple effects, especially on the yen and the renminbi.
The attack of the dollar against the yen
Since April this year, the trend of the yen can be described as a collapse.
The exchange rate of the US dollar against the Japanese yen has broken through a record low of 154 yen to 1 dollar.
This dramatic drop is not only a numbers game for the exchange rate, but also a direct reflection of global capital movements.
The U.S. strategy seems to be to accelerate its offensive when other currencies appear weak, in order to gain a more favorable position in the global currency market.
This is a big challenge for Japan, which has also been hit hard.
Among them, the plunge of Japan's three-month government bonds has set an astonishing record of 100%, and other maturities of government bonds have also fallen to varying degrees.
The renminbi's counter-strategy
Unlike the rout of the yen, the renminbi seems to have shown more resilience in this undeclared currency war.
Recently, dollar bears have also tried to carry out a similar attack on the yuan, especially in the offshore market in Hong Kong.
However, China quickly moved to effectively stop further onslaught from the bears by raising the offshore renminbi's overnight call rate to 6.3%.
Such a move not only reflects the rapid response of the market, but also demonstrates China's determination and ability to maintain its own currency stability.
The influence of other countries in Asia
This offensive of the dollar is not limited to Japan and China. As a result, currency markets across Asia have come under tremendous pressure.
Historically, a similar situation has occurred during the 1998 Asian financial crisis, when the dollar's aggressive offensive nearly collapsed the entire monetary system in Southeast Asia.
Although the current situation is different from that of 1998, Asian countries still need to be highly vigilant in the face of dollar pressure.
Solidarity and common defense may be the best strategy for Asian countries in the current invisible currency war.
The future of the global economy
Observing the current global financial dynamics, this series of actions by the US dollar is not only a challenge to Asia, but also a big test for the entire global economic system.
If the dollar continues to play a hawkish role on the international stage, it could trigger a defensive response from more countries.
The result of this ripple effect could lead to more uncertainty and turmoil in the global economy.
Economic strategies and responses
In this context, the strategies of governments and central banks are particularly crucial.
For example, how Japan and China adjust their monetary policies can have ripple effects not only on their own economies, but also on global markets.
In the face of a collapse in the exchange rate and the government crisis, Japan may need to reconsider its combination of fiscal and monetary policies to avoid the risk of a long-term downturn.
China's efforts to stabilize the renminbi through effective market intervention provide a model for other countries to defend against currency attacks.
In addition, the currencies of other small Asian countries are also under pressure, and they need to strengthen their resilience through regional cooperation and common policy measures.
For example, the establishment of currency swap agreements or mutual reserve funds could be an effective way to alleviate intraregional pressures and enhance economic security.
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