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Recently, the Asian currency market has staged a remarkable drama.
The South Korean government has issued a rare warning about the sharp appreciation of the won.
At the same time, the Philippine peso experienced a significant decline, at one point falling below the exchange rate of 57 pesos against the US dollar.
This series of currency fluctuations is not just the result of the economic activity of a single country, but the product of the economic interaction of the entire region and changes in global markets.
First, let's look at the situation in South Korea.
The strong appreciation of the South Korean won can be traced back to the strong rebound in its export-driven economy, particularly in the semiconductor and automotive sectors.
In the first half of this year, South Korea's semiconductor exports increased by 15% year-on-year, while automobile exports increased by 20%, according to the Bank of Korea.
However, the strong won is a challenge for import-dependent industries and domestic consumers.
This is why the South Korean government will warn about the appreciation of the won and start to pay attention to the fluctuations in the exchange rate market to avoid a negative impact on the economic recovery.
In contrast, the situation in the Philippines is different.
The depreciation of the Philippine peso is partly due to domestic political instability and the increase in its external debt.
According to the Philippine Bureau of Statistics, the Philippines' total external debt rose to $800 billion in the first quarter of 2023, a record high.
In addition, infrastructure development in the Philippines continues to advance, which will help the economy in the long run, but increase the pressure on the fiscal sector in the short term.
Although the depreciation of the peso has helped to improve the competitiveness of exports, it has also increased the cost of imports and the pressure of domestic inflation.
The different fates of the two currencies reflect the different strategies and challenges of Asian countries in the face of global economic volatility.
South Korea is trying to balance domestic and foreign demand by controlling the exchange rate to protect its economy from excessive growth, while the Philippines is trying to balance the payment account by stimulating exports and foreign investment.
On a broader level, these currency fluctuations are also a reflection of global capital flow trends.
Changes in U.S. monetary policy, especially the Federal Reserve's rate hike path, have had a significant impact on the currencies of emerging market countries.
As global investors seek higher yields, the currencies of emerging market countries are part of their strategic adjustments.
Overall, currency wars in Asia are not simply exchange rate issues, but a complex scenario involving international trade, monetary policy, political stability, and global economic interactions.
These changes pose new challenges to policymakers in various countries, and how to stabilize the rudder in the sea of the global economy is a problem that every country must face.
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