Preface
Be vigilant, the Asian currency defense war has begun, and the ultimate target of the United States may be China!
On April 17, according to state media, Federal Reserve Chairman Jerome Powell said on April 16 that with current inflation, it may take a long time for the Fed to be confident enough to cut interest rates.
Since then, the U.S. dollar index has expanded rapidly and is now around 105.87, hitting a five-month high for many consecutive days.
It has to be said that in this "battle", the dollar was really fierce, after they "attacked" the yen, and then the Japanese government bonds were basically exhausted.
Update on the US dollar
However, what people didn't expect was that the Korean won, which had been depreciating before, actually began to rise sharply on April 17, what is going on?
It should be noted that in the face of the "ferocious" dollar, China has also made a "ruthless move".
What measures has the mainland taken to deal with it?
What about the "war situation" in India, Vietnam and other Southeast Asian countries?
Japan's depreciation, causing a "butterfly effect"
The sharp depreciation of the yen began in March 2022, and many people were worried at the time that it would cause a "butterfly effect" and an "Asian currency war".
This argument about the "Asian currency war" stems from the fact that many people feel that the depreciation of our Asian currencies is very "contagious", and it is true.
I wonder if you still remember the "Abenomics" period that began in 2012?
At that time, in order to stimulate Japan's economic development, former Japanese Prime Minister Shinzo Abe and the Bank of Japan passed a series of measures to single-handedly "star" the sharp depreciation of the yen.
Although the final result was generally good and did not cause a "currency war", it still proved that the Asian economies "lost everything".
This was also the case with the financial crisis of '98, when the yen depreciated and other Asian countries were affected to some extent.
Of course, although this "currency war" seems to be very similar to the original situation, there are still careful people who have discovered the subtleties, so people have called it the "Asian currency war".
What is the situation of this "defense war"?
The yen fell sharply and the won rose
At present, according to media information on 17 April, when Japanese Prime Minister Fumio Kishida was still visiting the United States, the yen fell off a cliff.
Specifically, since April, when the dollar index has risen sharply, the yen has hit a new low since 1990 intraday, and for many days, the yen has continued to fall below the 154 mark against the dollar, although the latest news says that the yen has temporarily left the low level since 1900, but the situation is still somewhat capricious.
On top of that, Japan's government bonds are the same, if not more dangerous, with the yield on 3-month government bonds plummeting by 100% and the yield on 6-month government bonds plummeting by about 16% on April 15.
Image source: Wall Street News, Yen situation
In the eyes of some people, this situation seems to be that the United States deliberately "branched" the Japanese prime minister, and then "attacked" in an attempt to bite off a piece of meat on those Japanese investors.
Speaking of which, perhaps the first thing the dollar wants to "move" is China, but unfortunately the mainland's "piece of fat" is not something they can bite if they want to, so they will first take the "mature" Japan.
Why do I say "matured" Japan?
In the eyes of many people, the reason why the US capital chose to use the yen this time was because Japan was too dependent on the US at the beginning, and on the other hand, it showed that the United States has long been unable to demonstrate its strength by "bullying the weak"? In desperation, the US chose to "attack" the yen.
So, how did Japan react to the fact that the United States did this?
Although we don't know the specific situation, but the United States took the brunt of the "shot" on the yen, which seems to have Japanese Prime Minister Fumio Kishida, on April 10, he and Biden attended a press conference together, when asked what he thought about Sino-Japanese relations, Fumio Kishida actually "mouthed" and said, "...... with (Japan's) ally China", although he quickly corrected it, but in the eyes of many netizens, the slip of the tongue also reflects the subconscious, Fumio Kishida seems to have spoken his heart, dreaming about "China is Japan's ally"?
Netizen's point of view
For Lao Mei, Japan seems to have always been "dare to be angry but dare not speak." ”
If nothing else, take this "currency defense war" as an example, judging from the whole process, this seems to be just a "sacrifice", but in the face of the strong move of the United States, Japan only slowly screamed twice.
And judging from the current situation, they seem to be quietly waiting for the final ending to come, and I don't know how the Japanese people feel about Fumio Kishida's approach of "licking the old beauty"?
This is the case in Japan, but what about South Korea?
On April 17, the South Korean won rebounded against the dollar, from the original fall below 1400, and the increase once expanded to the current 1%, leading other Asian currencies, South Korea is really worthy of being a "good ally" of the United States.
Compared with South Korea, the Philippine peso, the Indian rupee, the Indonesian rupiah, and the Vietnamese dong show some "miserable", especially India, the Philippines, and Vietnam.
On April 17, the Indian rupee continued to decline, continuing to fall below 83.5 in November 2023, and the Philippine peso once fell to 57.29 pesos per US dollar, although it rebounded slightly on April 18, the situation is still not good, and the Vietnamese dong hit a record low on April 17.
Philippine peso situation
Image source: Wall Street Insight, VND
On the other hand, the rupiah situation is slightly better, on April 16, they were hit hard against the dollar by more than 2%, falling to a four-year low, and on April 17, they began to rise slightly.
"The war situation of other Asian currencies is so fierce", what about our renminbi?
Situation in Indonesia
The renminbi has made a ruthless move, but it still cannot relax its vigilance
In fact, after the sharp fall of the yen, the US dollar also tried to "shoot" at our renminbi, and they attacked Hong Kong's offshore renminbi market.
We raised the overnight lending rate of the offshore renminbi to 6.3%, allowing US capital to "flee".
Perhaps many people don't know how powerful this trick is, in layman's terms, if American capital wants to short the RMB, it has to borrow RMB positions, but when the offshore RMB overnight lending rate is high, their short earnings are not enough to pay interest, so you say this trick will never end?
Of course, it's amazing, it stands to reason that Japan can do the same, why don't they choose this approach?
In my opinion, on the one hand, they don't want to do that, and in the eyes of many Japanese people, it's not in their interest, and on the other hand, they can't do it, and this kind of raising the overnight call rate is "hit the shot", but there is still a certain amount of risk.
You know, this is equivalent to "opening the door", you can let the United States harvest, how dare Japan do this in this situation?
One of the reasons why our renminbi can be so "risky" is that from the current point of view, in the context of the sharp interest rate hike by the dollar, the renminbi is one of the most stable currencies in the world.
We can also see from the intuitive data that in 2023, other Asian currencies will continue to depreciate, while our RMB will only depreciate by 4.55%;
On April 17, 2024, official media also reported that data from the China Foreign Exchange Trade System showed that the central price of RMB against the US dollar was 7.1025, an increase of 3 points, and the offshore RMB jumped against the US dollar in the short term.
It can be seen from these data that although our renminbi is currently depreciating and the mainland's foreign trade industry is also affected to a greater or lesser extent, it is still relatively stable.
Of course, even so, we, including other Asian countries, cannot let our guard down, after all, this "currency war" is not over.
What do you think about this, welcome to express your opinions!