Author: Li Yunfei|Source: Original
A financial turmoil in Asia is coming. Because the United States began its final madness, raising its sickle to accelerate the harvest of Asia's wealth, causing Asian currencies to begin to fall one after another.
So to what extent can Laos and the United States go crazy? Will it be like Thailand in 1997 to trigger another Asian financial turmoil? And what will be the impact on the mainland in this economic game between Asia and the United States?
Now Lao Mei is really anxious, and she can't take care of her appearance anymore. That is, when the United States is full of internal problems, and it cannot raise interest rates and cut interest rates, it can only launch a currency war to harvest the world's wealth and make itself bloody.
Now, with the change in US economic expectations and the situation in the Middle East, the dollar index has risen sharply, and the exchange rate of non-dollar currencies against the dollar has fallen. Asian currencies fell the most. For example, the South Korean won has now fallen to the 1,400 mark, the lowest since November, the Japanese yen has fallen below 154, a 34-year low, and the Indian rupee has fallen to 83.5, the same low since November.
In addition to the above Asian large economies, the currencies of those small economies, such as the Indonesian rupiah, Vietnamese dong, and Philippine peso, are not to mention. Now the Vietnamese dong has fallen to 25,463, a new low in 9 years. There really is no minimum, only lower!
In this case, it can be said that now Asian countries have collectively begun to fight against the strong exchange rate of the US dollar, and this Asian currency defense war led by the United States has officially begun!
So let's start by talking about why Asia is the most affected in this confrontation between global currencies and the dollar? There are three reasons why.
First of all, Asian countries are relatively indebted, they do not have enough foreign exchange reserves to intervene in the foreign exchange market, but their overall economic size is very large, which provides favorable conditions for Wall Street consortiums to short the currencies of these countries.
For example, during the financial crisis in Thailand in 1997, Thailand's foreign exchange reserves were only $20 billion after deducting short-term foreign debt, which provided Soros and other Wall Street conglomerates with the best opportunity to short the Thai baht, which eventually spread to the whole of Asia.
Second, Asian countries, which are mostly emerging economies, tend to opt for complete capital liquidity, thus giving up exchange rate stability. There's a technical term for this: the Mundell Impossible Triangle. They hope that doing so will provide opportunities for international speculators to boost the domestic economy.
However, in a fully financially liberalized market, the national currency is vulnerable to fluctuations in the exchange rate of the US dollar. As soon as the dollar raises interest rates, a large amount of money will run away, and as soon as the dollar cuts interest rates, a large amount of money will come in again, and the country has no policy to intervene in the inflow and outflow of foreign capital.
Thirdly, there are the shortcomings of the "export substitution" model. Asian countries tend to be more dependent on export-oriented economies. For example, South Korea is known as the canary of the global economy, and South Korea must be the first to feel the slightest turmoil in the global economy.
Vietnam, on the other hand, is more dependent on exports, with a third of its export market in the United States. As a result, the country's economic foundation is very fragile, and once it is affected by external factors, the country's economy will collapse violently.
It can be said that many countries in Asia have become the first big meal that Lao Mei harvests when necessary. For example, Japan, South Korea, and Vietnam must have been the first countries to fall before the United States fell.
So will the United States really create the Asian financial crisis in 1997?
Let's take Vietnam as an example, with its current foreign exchange reserves only $100 billion, while its external debt is as high as $196.7 billion. Therefore, it is not difficult for the United States to really want to empty Vietnam's economy.
But we have to see the fact clearly, that is, these countries are often the little fans of the United States, and now the process of global de-dollarization is accelerating, and even these little fans are beginning to fight against the dollar exchange rate!
In other words, what Lao Mei wants now is money, not death. If you really force everyone to be anxious, this will only give up these little fans to China. Will Lao Mei do this easily? Unless Lao Mei's own economy is extremely bad.
So let's talk about the impact of this Asian currency defense war on China?
On the positive side, more developing emerging countries are likely to further de-dollarize and strengthen economic and trade exchanges with China, which is very beneficial to the further internationalization of the renminbi. In fact, in the end, the global economic game has become an economic game between China and the United States. On the contrary, while the United States is recovering its blood, it is also weakening its global voice and economic status.
On the downside, that is, the renminbi is also depreciating, and now the offshore renminbi exchange rate against the US dollar once fell below the 7.28 mark, which will also have a certain impact on the mainland's real economy and stock market. Second, now that a large amount of international capital is flowing back to the United States, foreign demand will be further suppressed, which in a certain sense is also detrimental to the mainland's exports.
In the face of pros and cons, China's influence in Asia will only be further strengthened as the huge domestic demand is the foundation of the mainland's economic stability, and with the start of the Asian currency war. You tell me?
Author: Li Yunfei, founder of a large Internet company, CEO of a large food chain enterprise, engaged in the Internet and physical chain industry for 20 years, has been reported by Sohu.com, Netease Finance, Tencent, Phoenix.com, Zhongxun.com, Baidu and other well-known media platforms, good at financial knowledge analysis, entrepreneurial guidance!