Asian Authorities Scale Back Forex Intervention

During October’s maelstrom of volatility in stock and online forex trading, Asian authorities spent billions of dollars to prop up their currencies, but now policy makers are beginning to favor some currency depreciation in order to remain competitive in the global market. The International Monetary Fund has forecast that in 2009, the economies of the U.S. Japan, the Euro zone, and Great Britain will shrink for the first time in half a century, lessening demand for Asian exports worldwide.

A currency strategist told The Economic Times that the currencies most likely to be hurt in coming months include the Singapore dollar, Taiwan dollar, Malaysian ringgit, and Thai baht, with these falling as much as 4% against the U.S. dollar by June 2009. The worst may have passed in currency trading for the hard-hit South Korean won and Indian rupee, but they remain vulnerable for now.