Yuan devaluation seen reigniting currency wars in Asia
A measure of the region’s 10 most-traded currencies excluding the yen is set to decline for a third year, its longest losing streak since 1997, amid signs the US will raise interest rates for the first time in a decade.
The People’s Bank of China’s cut its reference rate by a record 1.9% on 11 August, triggering a global rout, and lowered it by 1.6% on Wednesday. Vietnam widened the dong’s daily trading band.
“This is like a double whammy with China allowing its currency to weaken,” said Wee-Ming Ting, the head of Asian fixed income in Singapore at Pictet Asset Management Ltd, which oversees $19 billion of emerging-market debt. “It will start a vicious cycle by different countries trying to depreciate their currencies.”
