October 4th, 2010
04:46 AM GMT
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Currencies are a confusing lot. "Any review of currencies is full of contradictions and paradoxes," said Mark Konyn, CEO of  RCM Asia Pacific. Nonetheless, we're going to give it a go.  Konyn gives me a good guide as to what's going on in the Asia-Pacific region.

By now, we all know that China's yuan is under the microscope for being dramatically undervalued in order to make Chinese exports cheaper. But Konyn points out the yuan is not the only undervalued Asian currency against the US dollar. In fact, several other emerging markets have cheap money. The only difference is these countries are starting to allow their currencies to appreciate while staying undervalued. Konyn believes the message is two-fold:

1) Foreign investors are still welcome but  they'll have to pay more to buy assets in these markets.

2)  These emerging markets are focused on improving their domestic spending power rather than relying on exports.

So what countries are we talking about?

Thailand, Malaysia, South Korea, Singapore and India

Why are their currencies rising? Konyn summarizes each country's situation:

Thailand – the Thai baht has appreciated 8.5 percent so far this year because of remittances, a trade surplus and foreign investment.

Malaysia – the government's planned privatization agenda, the reclassification of Malaysia from "emerging" to "advanced emerging," and strong direct foreign investment.

South Korea -  the won has appreciated 5 percent since August because of  its  current account surplus (surplus from trade in goods and services) has exceeded expectations.

Singapore – Strong capital inflows, good economic fundamentals and a monetary authority committed to overall tightening that will drive appreciation. Singapore uses the exchange rate to manage inflation.

India -  the rupee has hada  strong rally the past 15 months because of strong inflows of foreign investment.  However, Konyn believes the rupee will lose ground by the end of the year because of a few warning signs: India's high inflation rate and its current account deficit (it imports more than it exports).

Japan is the big paradox in Asia. The yen is overvalued and the  government is having a tough time pulling it down. The government intervened on September 15 by selling billions of dollars worth of yen, but the impact has been  slight.

"Despite the obvious economic problems, international investors have viewed the yen as a safe haven in the current circumstances. Unfortunately, this has pushed the yen higher," Konyn said.



soundoff (44 Responses)
  1. 5 fingers

    A ho-hum speaker, Mark Konyn.
    We can only say USD is overvalued.
    American were born on 6-fingers, they concern all others are undervalued to five.

    October 4, 2010 at 6:07 am |
  2. Frank

    I have read a lot of articles about chinese currency, but why people always blame chinese, the problem is americans need import goods from other countries. In fact if americans are not going to import anything from china, they will buy products from others instead. So, even if yuan appreciated, it still useless to reduce American's deficit.

    However, china is a developing country still, regardless of how much their GDP it is, chinese have much less income, and 1.3 billion population, as result there are lots of cheap labor and the cost will be very low, which can not compare with americans.

    Americans need to recover their manufactory, or willing to pay more for their imported products.

    In addition, chinese government serves chinese, they would consider china interests first. In other words, people should think about their own problems more than others.

    October 4, 2010 at 6:12 am |
  3. Iwa

    American were born on 6-fingers, they concern all others are undervalued to five.

    BACK UP! SPLENDID WORDS!

    October 4, 2010 at 7:32 am |
  4. Sachin

    You keep printing the US dollar as though there is no tomorrow but you expect others to keep adjusting the value of their currencies so that the US dollar & economy survives. Can you please explain this economic policy as I seem to be seriously lost?

    October 4, 2010 at 7:44 am |
  5. Shaheen

    The Chinese have a point when saying its an over-exaggerations to say that America's troubles are because of an undervalued Yuan. The Chinese have had enough surplus throughout this decade to allow them to subsidize their exporters by keeping their currency low, The US could have done the same through direct subsidies, in fact it did just that for some time to select industries including aircraft manufacturers, but the Chinese point is that the US lacks the trade surplus that would allow it to give the same level of protection to its exporters.

    October 4, 2010 at 7:46 am |
  6. JOU

    wow~~~
    BACK UP,Frank!

    October 4, 2010 at 10:16 am |
  7. kcyang8

    Japan currency Yen ain't overvalued.

    If China's RMB-reminbe vs US is 6.7 to 1 greenback,then Yen should be equally traded at that ratio vis-a-vis 6.7 yen to 1 U.S.$.

    October 4, 2010 at 10:24 am |
  8. Marko

    all in Asia are bad but only you are OK.... what a joke

    October 4, 2010 at 10:53 am |
  9. luoyangfeng

    people should think about their own problems more than others.good opinon

    October 4, 2010 at 12:15 pm |
  10. Noliving

    Well frank I think it is a little obvious, the reason why they are blaming china is because it is acting as an illegal subsidy to their products that the US imports meaning its more difficult for US companies to compete in the US and more importantly in China.

    If you let the yuan appreciate it will help reduce the trade imbalance between the US and China, it will also help increase the Chinese income because if the yuan is worth more than what ever money they have saved up which is quite a bit, will also be worth more.

    Yes America needs to recover their manufacturing capacity but its difficult to do that when China yuan is undervalued and acting as a subsidy.

    October 4, 2010 at 12:19 pm |
  11. Zhaoliang

    American should consider about their own problems,not only others

    October 4, 2010 at 1:08 pm |
  12. JPNdefender

    China's RMB is undervalued.
    Because China is undervaluing China's RMB on purpose of exporting advantageously.

    October 4, 2010 at 3:04 pm |
  13. Troybal

    @Noliving! You stated it best!

    October 4, 2010 at 3:28 pm |
  14. Oladipo Akinyemi Omole

    Greetings Pauline.
    That was quite profound and I must say that Asia generally is quite aggressive in its drive for foreign investment and it's a darn good strategy. Eventually devaluation or anything like it is no more about gaining a competitive edge against goods and services of other countries as such .It's the latest I've learned about the concept.There shouldn't be any brouhaha about devaluation again as it turns out it's a now tested and proven business strategy, but only developed and developing economies dare try the strategy, because they have the infrastructure to support.For Japan , it's tough to fight the invisible hand ultimately, if it's objective is still to boost sales.Cheers.
    P.S You guys are operating at the speed of sound or light whichever is faster, but the bottom-line is that you're all darn good and I'm really thrilled.Congratulations and keep-it up. It can only get better.

    October 4, 2010 at 3:56 pm |
  15. 69sport

    It is another way to contain China for USA,which are fear of China's development, to limit appreciation of the Yuan .On the other way while the majority of China's foreign exchange reserves in U.S. dollars , If yuan is undervalued ,The American will make a large sum of U.S. dollars.The third,the currency is 1USD=6.7RMB,If undervalued to 1USD=4,such as you buy a shoes that from china that just 40USD such as http://www.69sport.com/goods.php?id=23523,if undervaled 1USD=4,We should pay 60USD,why we should pay so much ,so china income will be decreased.

    October 4, 2010 at 4:17 pm |
  16. hiddenlevers10

    For far to long the US has let countries slip by with undervalue currencies and insitutiing protectionist policies. Just look at our growing trade deficit.

    http://www.hiddenlevers.com/hl/u?chTjdx – US Trade Deficit

    October 4, 2010 at 7:08 pm |
  17. Kumar

    We need to have tighten the Fedaral Reserve policy,strict measures on Banking sectors and loan & mortgage policy,Bank rate, and rental policy
    which must control by Federal Reserve with strong measures,
    allow Exports at very low margin level,
    Being a proud Indian American I can say stop import from the countries
    like China,India, Pakistan,Indonesia,and all Asian continents,make more
    vide range of manufacturing infrastucture at effordable level,
    watch on incoming currancies from abroad very soon!
    stop American Investments in to Asian countries very soon,that might be reverse effect on American imports while for 3 years but will recover overtime! with European countries!
    Kuumar

    October 5, 2010 at 1:18 am |
  18. SPPang

    Frankly speaking: USA should print more of their dough in large quantity like they've done before. Except this time around in bigger denomination like Yen unit. Will then the present US dollar find its current roots.
    After all USA has been off loading trllions of their notes since 2nd WW without any shame by telling others for counterfeiting.

    October 5, 2010 at 1:59 am |
  19. 22ndCentury

    Why we Chinese are the one to be blamed? I am still not sure why revalue Yuan will bring more job in USA and better life in China.

    My understanding is the only products making in China, are cheap products. German has the best cars, Japanese has the best electronic and mid range car, Korea has TV and low-end car.

    American has the best technology and infrastructure to build high-end, cutting edge and innovative products that nobody else can make in this world. Just look at these F22, supercarrier and space shuttle...

    Why fighting job with China for making cheap product? I want to buy a GM car with some NASA technology build in, why not?

    October 5, 2010 at 2:34 am |
  20. s. ibzagh

    does the USA print their dollars, NO they do not have the guts to do so

    October 5, 2010 at 2:47 am |
  21. Rahul jain

    how is Indian rupee is undervalued,they are run by market factor unlike pegged by the government

    October 5, 2010 at 8:51 am |
  22. alien

    US keep printing their dollars which make it disappreciated in order to reduce its own debt,meanwhile US keep urging other countries to appreciat their currency which also will disvalue DOLLARS,what an irony!!!
    US use their greedy financial weapon to steal money from all other councties like 1998 Asian economy crisis not to mention Janpanese 90s housing bubble which made Japan in downturn for two decades including now....
    why not reflect youself first before you point to others???

    October 5, 2010 at 9:51 am |
  23. InPassing

    If all sides can put away their flag-waving for a few minutes...

    chinas currency IS undervalued, it is a deliberately chosen policy that has driven economic growth and given most export sectors significant competitive advantage.
    However no gain is without cost, as Noliving suggested it has an impact on domestic savings (but it could be argued growth is better promoted by making it less profitable to save than to spend anyway). Another risk is that when a currency is undervalued so blatently, at obvious competitive disadvantage to trading partners, naturally those partners will start to seek ways to reduce that disadvantage... especially in times of economic stress.
    Such as now.
    Its all just part of the same game that causes buyer and seller at the market haggle for the best price FOR THEM.. but not at the cost of losing a repeat customer or favored buyer status.
    meh, i've muddied the waters enough.

    October 5, 2010 at 9:58 am |
  24. kcyang8

    Just as the Roman Empire, America's at a cross-road, the road of noreturn to the deteriotating and downgrading path to become 2nd-tier economy nations, with diminishing influence and importance of world's finacial economic affairs. Reasons: their wages're too hi, and their standard of living too,.And for the past century, they're living on the borrowing,and exploiting monies to substain their high if not luxurious living at the expenses of 3rd world nations, The solution to save their economic mass is easy and yet painfull. Cut their workers' wages in half and put the criminal fat-cat bankers like Goldman Sachs behind bar.

    Considering these: US per capital income is $60,000, while Chinese is only $4100.

    And also abolish the president's convuluted and complicated system of selection of its leader, it cost 1 billion. These mony could be used to save a lot of homeless and dire=strait Americans from starving.And also cut their lawmakers salaries to half,because they talk too much and do nothing but could only bitch and bash on China vis-a-vis RMB exchange rates, and the cheap labor costs.

    They've to find a good GPS,guiding tool to find the right paths back to prosperities and humble livings. And since Americans political leaders were/are good in aggressive behaviors and war-mongering,they're to learn more about the tactic and inteligent ways of fighting every and any winning war. Don't fight the "shock and awe" war that could not bring victory.

    Study the Confucius way of running the country and society : be humble not arrogance, and patience rather than gunho of rushing to war.

    Heaven save America.

    October 5, 2010 at 11:28 am |
  25. John Baker

    If Chinese products are so bad and so cheap, who's buying them? Apparently the biggest market for these cheapy products is the USA.
    So the question to ask is not why shipped these products to the US but why did the US sell them in the first place?? Apparently there are a lot of people in the States who like cheap products. Now question is: what do you want?

    October 5, 2010 at 4:10 pm |
  26. kcyang8

    Who says RMB's undervalued? Who has the power or authority to determine and decide which(nation) currency must be so much or so value as compare to USD or Euro.

    Guys like Soros and Goldman Sach're the actual market factors and winners that dominate the exchange rates. They're the vultures or hyaena and the scanvangers with big jaws.

    I say RMB's overvalued, it should be 80 to 1 USD,like jap's yen.

    October 5, 2010 at 7:08 pm |
  27. John

    The value of currency is dependent upon the demand for the products that a nation produces. Some countries subsidize products so that the cost of selling in some cases is cheaper than another country can produce that product, i.e. subsidized U.S. agricultural products like corn, which for example selling that product to Mexico would cost the Mexican farmer more money to plant the seed than to purchase from the U.S. So if countries are over-valuing their currency, that means their exports are subsidized...or do I have this backwards?

    October 6, 2010 at 4:38 am |
  28. Trade imbalance

    Hey Frank, I'll answer your question. If the Yuan appreciated, then Chinese would be payed more (value wise), and jobs would move back to other places in the world instead of staying in China. As for trade imbalance, the trade imbalance with other nations it's not so bad because their wages rise and then the jobs move around again. They are better for it, and so is the United States. China knows if it makes its currency go up, it will just be another place on the map to build things (among many many others), that's why they are clinging so bitterly to this artificial advantage.

    As for China looking out for China, of course they will do everything they can for themselves. The US has to do the same, which we are not doing.

    October 6, 2010 at 6:36 am |
  29. Trade imbalance

    Zhaoliang, trade with China is an American problem. We aren't standing up for ourselves when we should. All nations should be building things not just one.

    October 6, 2010 at 6:38 am |
  30. Jack

    An interesting thing to be noticed:

    To buy a department along 4th ring road in Beijing, it's about 30,000 RMB per square meter, which is almost $4,500. To appreciate RMB, which means it will cost more us$ for every square meter. Compare the house price in major cities in U.S, isn't that obvious the bubble in house market ?

    October 6, 2010 at 11:53 am |
  31. Mansour

    If the Chinese RMB is undervalued, then it is now the right time to change one's savings from US$ into Chinese RMB, who agrees?

    October 6, 2010 at 1:20 pm |
  32. Wisit Wongtassaneekorn

    I think this is a good sign for world economic turnaround, then it will impact to other regions of the world like a chain reaction.

    October 6, 2010 at 1:27 pm |
  33. Jacob Schonberg

    USD is clearly overvalued , when we look on the debt and the minus on the trade balance and the internal problems in America then it is hard to understand the price of USD. It is funny that USA has the most advanced technologies and then in some aspects are so way behind – your banks do not even use the international Bank Account Number IBAN system , you still live in the stone age in some details

    many greetings Jacob , Danmark

    October 7, 2010 at 7:18 am |
  34. maroko

    22thcentury, are you here? I was too tired to answer you when we talked last time. You think Japan took Senkaku island at sino-Japanese war, 1894-1895 right? Senkaku is now uninhabited island now. But, Japanese were living in Senkaku, working at a factory of dried bonito in1880-1940. I am telling you truth. Japanese were already living there before the war starts. Senkaku has nothing to do with the war. By the way, one dollar =82 yen now, one dollar=350yen 30 years ago, Do you know?

    October 8, 2010 at 4:47 am |
  35. kcyang8

    China's being bullied and scapegoated. Problem's not with China but with the US leadership(or without brilliant economists).

    Obama depends heavily on Paul Volcker as his economic sergent general, a Zombie,aged walking skeleton,was once successful in combating and counter the super-inflation period-mortgage rate @18% during Reagan era. But this time around, time's changed, the core problem of US economy ain't inflation but just the opposite vis-as-vis the deflation. This is because after WWII American govt.'d screwup and squandered their nation wealth and tresure, wasted on wars and overspendings like no tomorrow. Now that they're broke and they blame everybody,particularly China. Their blaming're just like accusing Atilla,and Chinggis Hann–the 2 Mongols–for winnning the wars against Giants bodysize of Germanic and Ruskkie, because their horses're running too fast and endured the 5000 miles conquisto journey-west.

    Also,China'd or should already learn the less of Japan's defeat and deterioated econimic mess after the l984 Plaza Accord: they succumbed and surrendered to the West and US in currency manipulated the Yens. 2 decades after, Jpan still suffered from that effects and devastated their economies. Super and ultra-high deflation followeed by the initial prosperities of Real Estates booms and their banks awashed and flooded with monies. And the Japanese felt great as they'd plenty of monies to spend and spare. So, the bought the luxurious Gold courses in Hawaii, and some of the most expensive 5-star hotels in LA.(a decade later they'd to sell all of them at a 70% loss due to l990 recession).

    Will China follows the stupid Jpan's way in appeasing and pleasing the American big brother, and has the visions and wisdoms to say "No" to the bullying Americans.

    Time's now and the moment's here. Chairman Moa'd never missed the opportunity in seeing and seizing the moment to fight the enemy vis-a-vis USA.

    October 8, 2010 at 6:07 pm |
  36. cyclops

    so, as an outsiders of china or US. Is this the right time to Buy or Sell Yuan???

    October 11, 2010 at 1:40 pm |
  37. Bill Rich

    US is in trouble because US didn't tax imported goods high enough. Fix that and everybody will be happy.

    October 12, 2010 at 9:08 pm |
  38. Bill Rich

    I hoped the "Rare Earth" issue would clear up people's understanding of international trade, and obviously it has not.

    The "rare earth" situation brought up the reason for the Chinese trade surplus on that particular commodity. Other countries do have reserves, but they had shut down production since the 90's because China can produce them much cheaper, and plentiful. China can produce them cheaper because Chinese government allow them to be produced so cheaply, and Chinese wages were low – mining and concentrating of the mineral for refineries elsewhere is a very labor intensive operation. And other countries don't want to have pollution that Chinese government don't mind, and Chinese people don't know.

    Rare earth issue sharpens all these aspects better than any other commodities as it issues are much more exaggerated: pollution from it is really lethal, and labor cost is really high. All these considerations can be applied to all other kinds of goods too. But people doesn't seem to be able to abstract lessons from this case.

    October 12, 2010 at 9:18 pm |
  39. AWE

    If you look at the exchange rate history, China has constantly let the RMB strengthen against the dollar. This talk about the RMB being devaluated is complete bullshit and American political populism.

    It cannot be China's fault if the U.S is not able to handle its cost level.

    South Korea is a fierce competitor to China in many export areas and they have been allowed to actually devaluate their currency a lot during the last recession.

    Because of political reasons the U.S has in no way protested against that.

    If the U.S wants a better exchange rate please continue to print more money. At some point the world will lose their trust and the dollar will really fall.

    October 13, 2010 at 12:13 am |
  40. charles

    Renminbi shengzhi yijing hen kuai le,hai yao women zenmeyang?

    October 14, 2010 at 5:51 pm |
  41. vkmo

    Nearly everybody has floating currencies. Communist chinese govt is setting a krazy exchange rate, which led to action by House of Rep on Sep 29: House OKd Bill Targeting China's Currency Manipulation -The 348-79 vote Wednesday sends the measure to the Senate. See Yahoo, NPR and CNN etc articles on the internet about this. D*mn currency manipulator- if somebody did that within china, the mao-dse-dung's red china successors will drag him into dungeon & throw the key away.

    October 15, 2010 at 7:48 pm |
  42. Sam

    If US continues to pay millions of dollars to the senior executives and $75 per hour for its factory workers (quoted from GM during GFC), the only way is to print more money and devalue the US dollar if they want to export more goods to other countries.

    October 17, 2010 at 1:07 am |
  43. 4biasjustice

    Noliving

    Hey Mr. Smart , i think the chinese know how to do math perfectly. they can look after their own interest no need for you to worry.

    and where you get the math that say RMB revalue is plus for china? from US financier? and what you still trust them after they broke all your saving.

    For one the chinese would not even bet their nickel on your financier advice.

    October 17, 2010 at 5:47 pm |
  44. nek

    an easy fix to the low US dollar is to stop the war in the middle east.. maybe I am off base here.

    October 18, 2010 at 11:11 am |

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