The Hyundai Research Institute said on Mar. 5 that Japan, China, and Singapore are intentionally depreciating their currencies to increase exports. It added that the other Asian countries are likely to jump on the bandwagon, which would then affect Korea’s export competitiveness.
“If the slowdown of the Chinese economy continues, expansionary monetary policy will become more prevalent, and the yuan could be additionally depreciated,” it commented, adding, “The weak yen is likely to become persistent as well if the recovery of the Japanese economy remains slow.”
At present, most Southeast Asian economies are showing little or no signs of recovery. Given that most of them are raw material exporters, the current situation is expected to continue for a while, with the raw material prices remaining low. Then, expansionary easing is likely to spread for economic stimulus.
“The Korean currency may become the only strong currency in Asia if China and Japan stick to monetary easing,” the institute continued, advising that export industries having comparative advantages be fostered to provide against changes in trade environments.