With the Federal Reserve maintaining high-intensity rate hikes, the currencies of China, Japan, and South Korea, all major Asian economies, have been more or less affected to varying degrees, and are under increasing pressure of depreciation. The exchange rates of the Chinese renminbi (with the offshore exchange rate as a reference), the Japanese yen, and the South Korean won have all depreciated significantly with the appreciation of the US dollar. As the three Asian countries share similar economic structures, most are on the main manufacturing output side. Many believe currency devaluation will be beneficial to exports, which is conducive to long-term economic stability.
Yet, if the situation of the 1997 Asian financial crisis is taken into consideration, the impact of currency devaluation on capital flows and asset values, and the "currency war" brought about by the devaluation of currencies, this may in fact bring about a sharp rise in financial risks in Asia. A few questions arise in this regard. Is a "competitive devaluation" of a currency good for the economy? Will there be another new currency crisis in Asia? Can China survive a new round of "currency war"?
