Asian currencies fall as investors worry about China’s economy

Today, January 25, the currencies of a number of countries in Southeast Asia significantly fell in price against the dollar due to growing investor concern about the state of the PRC economy. The Philippine peso, Indonesian rupiah and Malaysian ringgit hit three-month lows against the US dollar. The Thai baht and Australian dollar rates fell to a two-month low.

Experts explain the mood of investors by the fact that the economies of Asian countries are strongly connected with China, so any slowdown in economic activity in China will also affect them. For example, in December, the PMI – the index of manufacturing activity – in China fell to 49 points, thus, the decline in this indicator has continued for the third month in a row.

“In these countries (Southeast Asia and the Asia-Pacific region as a whole.— “Ъ”) Key economic sectors that generate a significant share of foreign exchange earnings are linked to China, from coal and iron ore mining in Australia to electronics manufacturing in the Philippines and tourism in Thailand,” Toru Nishihama, chief economist at the Dai-ichi Life Research Institute, told Japan’s Nikkei agency. The IMF estimates that in 2022 alone, about 30% of all exports from Australia and 20% of South Korea’s exports went to China.

Yesterday it became known that the Central Bank of China from February 5 starts monetary easing program to stimulate the economy. In addition, according to media reports, due to capital flight, the Chinese authorities limited access for retail investors to funds investing in foreign securities.

Kommersant wrote about the results of the development of the Chinese economy in 2023 in the publication “China is no longer in a hurry”.

Evgeny Khvostik