China: RMB depreciation a headwind for other Asian currencies - ANZ

Khoon Goh, Senior FX Strategist at ANZ, notes that the RMB continues to weaken on a trade-weighted basis.

Key Quotes

“Further near-term weakness is likely to be tolerated by the Chinese authorities so long as there are no spillover effects into wider financial markets and capital outflow pressures are manageable.

RMB depreciation should help support Chinese export growth. But in an environment where external demand remains subdued, China’s improving competitiveness will likely come at the expense of other Asian exporters.

This in turn puts pressure on central banks in the region to ease policy further, as relative competitiveness concerns from RMB depreciation intensify. We see KRW and TWD as the currencies most vulnerable in this regard.”