introduction
Recently, according to NHK, the yen exchange rate has fallen below the 152 mark, for four consecutive trading days, refreshing the lowest level in 34 years.
In fact, since mid-March this year, the yen exchange rate has been struggling at low levels.
Almost at the same time, the won, the Vietnamese dong, and the Indonesian rupiah also fell one after another. These Asian currencies have all experienced varying degrees of exchange rate declines.
In the Asian currency market, the Indian rupee has become the most stable side of the current exchange rate.
In just a month or two, so many currencies have fallen, and some people can't help but start worrying.
If the fall continues at this rate, will it shake the Asian economy and trigger a new round of international financial turmoil? Or will it turn into a large-scale "currency war"?
Many currencies depreciated at the same time, and the yen was frantically shorted by international capital
People's speculation is mainly based on such a fact. That is, the yen is being shorted. This can be seen in a set of data in April this year.
According to the data, as of April 2, there were more than 148388 short yen contracts held by international capital. There are signs that a currency crisis is on the way.
In fact, the root cause of the crisis lies not in the affected countries, but in the Fed's long-standing policy of high interest rates.
It is precisely because the Federal Reserve continues to raise interest rates, which has led to a favorable international situation for storage, that so many yen assets have been converted into dollars and flowed back to US banks, which in turn has led to a decrease in Japan's dollar reserves and a currency depreciation.
In fact, the Fed has already started raising interest rates two years ago. The Fed is doing this primarily to salvage the stubbornly high inflation rate and the debt crisis.
The United States originally planned to raise interest rates to bring the dollar back, throw the crisis out, and turn the crisis into a safe place for its own economy.
However, even with 11 interest rate hikes in two years, the inflation index in the United States is still not optimistic.
Therefore, many speculators deduce that since the expected goals of the United States have not been reached and the problem has not been solved, then the Fed will not cut interest rates in the short term, and the situation is still positive for the dollar.
So much so that in March this year, as soon as the US inflation index was announced, it immediately caused a violent reaction in the international capital market.
Everyone is bullish on the US dollar, singing the yen down, and many Asian currencies have also fallen for similar reasons.
It was this opportunity that international capital seized on to short Asian currencies and repeat the Asian financial crises of 1997 and 2008.
While international capital is waiting for an opportunity, the continuous deterioration of the international security situation has also exacerbated the depreciation of the yen.
Recently, the conflict between Russia and Ukraine, the blockade of the Red Sea straits by the Houthi forces, the tension between the United States and Iran in the Persian Gulf, and the increased risk of war have led to the rise in the price of crude oil, non-ferrous metals and other commodities.
And Japan is a country that is highly dependent on imports. The raw materials and energy required by Japan's manufacturing industry need to go through overseas channels.
Therefore, the price of imported goods is equivalent to a barometer of the Japanese economy. The price has risen, indicating that the economic outlook is not optimistic.
Investors see no hope in Japan, so they sell the yen and swap it back for dollars, exacerbating the yen's depreciation.
The depreciation of the yen, in turn, will increase the cost of imports, hit the manufacturing industry, curb household consumption, and drag down the economy.
The dangers of the fierce depreciation of the currency, and whether it has any impact on the mainland
So, what will happen if the value continues in this way? More than 20 years ago, South Korea and now Egypt have already given the answer.
In 1997, the financial crisis swept South Korea, and the won lost nearly 50 percent of its value. At its worst, 1 dollar could be exchanged for 2,067 won.
The depreciation of the Korean won against the US dollar means that the US dollar buys South Korean assets at a 5% discount.
Therefore, at that time, on the one hand, South Korean financial institutions and retail investors were in urgent need of repaying their debts, and they were cutting meat and selling stocks.
On the other hand, Wall Street financial giants took advantage of the situation to harvest at low prices and continued to buy South Korea's superior assets.
And that's not all, since South Korea's external debt is usually measured in dollars. Therefore, the weakening of the won is tantamount to increasing the pressure on the country's external debt repayment.
At that time, South Korea was already insolvent and on the verge of bankruptcy. In order to survive the crisis, the South Korean government chose to turn to the IMF for help.
But the IMF's bailout was not given for nothing, and came with a package of harsh conditions. One of them is to allow foreign investors to hold 50% of the shares of listed companies.
Once South Korea agrees, it will be equivalent to selling its high-quality assets to Wall Street capital.
But South Korea has already burned its eyebrows, how can it not obey, that is, at this time, Samsung handed over half of its shares to foreign capital.
And now Egypt is a vivid portrayal of the repeat of the financial crisis of '97. The Egyptian pound fell to the bottom, and the dollar capital entered the market in a big way, buying everything they could see.
Forced by the situation, the Egyptian government could only sell more than 30 state-owned enterprises at a low price in order to repay its debts.
As a result, many people have begun to worry about whether the financial crisis in various countries will trigger economic turmoil in Asia, which will then spread to the mainland.
It can only be said that such worries are unnecessary.
First of all, the numbers speak for themselves. Recently, when the yen and South Korean won have been falling, the yuan has fallen by less than 0.5%, and the value of the currency is quite strong.
Second, a currency crisis is essentially a balance-of-payments crisis that usually erupts periodically and periodically in countries with high financialized trade deficits.
China, on the other hand, has a perennial trade surplus and has a large reserve of dollars on hand. As long as China's exports still have a place in the international market.
Then, the losses caused by various stock market crashes and currency wars can be quickly recovered. Second, China's ability to resist risks should not be underestimated.
The mainland's current financial regulatory system and financial system have made it impossible for international capital with ulterior motives to take advantage of it.
Regulators can identify and respond to financial risks and security risks in a timely manner, and avoid the chain reaction caused by currency fluctuations.
Therefore, those countries that have suffered from inflation and depreciation may be able to find a way to rescue them from China.
It is said that the currency war is a war without gunpowder. Since it is a war, we must not just lie down and be beaten, but also come up with countermeasures and take the initiative to attack.
Like Egypt, it is also unable to keep its own core assets, and instead of cheapening the United States, it is better to open up to China and let the Chinese also enter the market.
After all, the dollar does not pick people. The sale of assets is to get more dollars to pay off the national debt, and whoever has money in his hands is not money.
Since Wall Street capital can use the dollar to buy Egypt's high-quality assets, China, with its abundant dollar reserves, is also capable of doing so.
The difference is that the United States is using a debt trap to harvest Egypt and deprive Egypt of the fruits of its construction.
After China takes a stake in Egypt, not only will it not do this, but will also allow more Egyptian companies to carry out bilateral trade with China, deepen Egypt's ties with countries in the Belt and Road Economic Belt, and untie the economy with the United States.
In addition, a large part of the reason why Egypt is in a deep crisis is due to the excessive strength of the US dollar.
If the right medicine is prescribed, Egypt can borrow dollars from China to repay US debts, as Argentina did in the past, and then use RMB to repay China's debts. In this way, Egypt will be able to convert its dollar debt into renminbi debt.
This move will not only enhance the international status of the renminbi, but also achieve the purpose of balancing US capital and reducing the arrogance of the US dollar.
The renminbi needed by Egypt to repay its renminbi debt can be obtained through the "internal circulation" among countries along the Belt and Road.
Objectively reducing the use of the US dollar, increasing the importance of the renminbi in the foreign exchange reserves of these countries, and accelerating global de-dollarization, it is really a triple win.
But if Egypt wants to do this, then it will be the United States that will suffer the most, and they will certainly not give up. Take the East Asia Free Trade Area more than ten years ago as an example.
At that time, after several rounds of harvesting by the Federal Reserve, Japan and South Korea gradually came up with the idea of engaging in "internal circulation" in East Asia, and some economists even imitated the "euro" and creatively put forward the concept of "Asian dollar".
Moreover, the relations between China, Japan and South Korea at that time were not as tense as they are now, and Japanese Prime Minister Nao Kan and South Korean President Roh Moo-hyun were both pro-China.
It can be said that with the efforts of the leaders of the three countries, the East Asia Free Trade Area was almost completed.
But the result, everyone knows. Naoto Kan and Roh Moo-hyun, the ouster of the ouster, the suicide of suicide, was replaced by Abe's island purchase turmoil and Park Geun-hye's THAAD incident.
Japan and South Korea are both economic giants and political vassals, and they are being manipulated by the United States everywhere, and it is not so easy to squeeze out the dollar.
In addition to the difficulty of reconciling international political contradictions, the conflicts in the industrial chain are even more life-and-death. As the saying goes, peers are enemies.
Unfortunately, China's semiconductor, shipbuilding, automotive and other key fields are more competitive with Japan and South Korea than win-win cooperation.
Especially after China has developed the whole industrial chain, the competition with Japan and South Korea has intensified, and the industrial division of labor and cooperation has become more difficult, so the concept of the free trade zone has remained in the concept.
Now China, on the contrary, is more complementary to OPEC and Russia, which are resource exporters along the Belt and Road, so Japan and South Korea can only seek more blessings for themselves.
epilogue
In short, it remains to be seen whether the recent depreciation turmoil in Asian countries will turn into a large-scale currency war.
But what is certain is that in recent years, the Fed's interest rate hikes have had a profound impact on global capital flows.
A large amount of capital is flowing out of emerging markets, and Asia, as one of the key engines of the global economy, has inevitably become the main target of this withdrawal.
This change in capital flows has directly impacted the exports and economic growth of Asian countries, making the currency defense war an important task that governments have to face.