The US implements currency manipulation watch lists to those with large trade surpluses. Thailand, Indonesia, Vietnam, Russia, Ireland and Malaysia are being considered for the watch list. There are multiple factors to consider when determining currency manipulation.
After this summer’s dramatic stock market and currency crash in Asia, traders are eager for insights into which Asian currencies may offer potential value.
Using a number of broad variables including their economies’ exposure to oil and gas prices, the Thai baht and the Korean won are looking the most attractive and may outperform their peers going forward, due to the fact that their countries’ economies will benefit from the fall in oil and gas prices.
“The Thai baht and the Korean won are not without risk though,” warns Desbarres, “with industrial output shrinking and exports contracting, the central banks may cut their policy rates – potentially causing these currencies to weaken.”
Currencies typically correlated with the Chinese renminbi may be at greater risk if the Chinese central bank decides to further devalue its currency. Of the Asian currencies studied, the Thai Baht is perhaps the least correlated to the renminbi – another reason why it may outperform going forward.