As currency weakens, Asian bankers in Asia go for classic defense

To deal with a familiar combination of fallen coins and uncertainties about economic growth, Asian Central Banks are returning to their classic policy plaube. The currency market is intervening when they are injected cash in their economy.

Asia's economy currencies are below 3 percent below this year due to relatively high interest rates like Indonesia, India and the Philippines, because they are facing challenges, resulting in the emergence of the US Treasury Reserve, with a reserve fund, a reserve US dollar, and on global commerce and non-capitalized foreign exchange. Rising tensions such as the US Presidency The Donald Trump carries his "America's first" agenda.

As well as the trade of tensions that could disrupt the supply chain of the region, this economy is already dealing with some slackness in the export order that was lifting the past year's growth.

In Indonesia, Rupiah dropped 5 percent in three months, Bank Indonesia sold a floating dollar immediately under its currency, at the same time, it bought bonds to convert through interference.

Bank Indonesia says that if you want to increase the rate to stop the rupee, analysts feel that it is irresponsible to do so.

Claudio Piron, a strategist from Bank of America Maril Lynch of Singapore, said, "It is very good, unless it does not necessarily work".

He said, trying to stabilize the currency needed to raise interest rates is a challenge.

"What would happen if you make internal monetization and currency deterioration across the country? When you reach that point, you need to increase the rate of interest and interest of the capital market again.

First line defense

After the financial crisis for 1997/98 Asian governments, the default policy option has been intercepted and sold by currency.

Even now, instead of increasing the interest rates of the lock-stop with the Federal Reserve, they are selling dollars and the central banks around the world steal the easy ways to gradually get rid of the global economy.

Because a large part has historical and high reliance on the foreign portfolio flow, often referred to as 'original sin' in the market.

Despite the absence of a large portion of their zamindars for the last 6 to 8 months, foreigners still own 40 percent of Indonesian government bonds and 45 percent of Malaysian ownership. They invested heavily in Thailand.

This means that their financial policies are hostage to external market conditions and these central banks have to maintain balance between their economy increasingly strong and keeping their currencies stable. To attract foreign investors, exports will be higher enough but will be stable so that a bond is not sold.

"Asia's macro strategy chief Frances Cheng said," Capital is not only because of the rate of growth of Asia's economy, but it also has the potential for growth and return of investment with real projects ".

"Especially in Indonesia, we think the interest rate should be the last option."

Malaysia and Thailand can support the bond market for a crisis in their local pension fund and state agencies, but this support is clearly not in India and Indonesia.

So India has liberalized the rules for investing in bonds to defame foreigners.

Analysts are hoping that South Korea, whose currency is a huge current account surplus buffer, the market fund will be easy to issue bonds in the next half of the year, just for damages in foreign capital.

Central Bank of the Philippines says that inflation is rising, weak pesos and falling stock market like this is the subject of currency discontinuation. Concerned about the remittance of workers from abroad, they are also coming back to the country, it is also spending Reserve Reserve Ratio earlier this year.

Bank has spent approximately 6 billion dollars in rupee finance to protect rupee in Indonesia in February-March. In the last few weeks, the currency has stabilized at $ 13,950 per dollar.

Central bank's bond purchasing operations have also been made on a lid on the production, with the same as the levels through USD 5,55 percent, with the three-month cost of clearing the dollar air inflation.

A foreign investor in Indonesia said, "The worldwide rate is increasing, but banks will not be more likely to benefit Indonesia or increase risk".

However, analysts believe that the absence of inflationary pressures, Indonesia and others will give some time to continue the policy.

"They've bought themselves for some time," said Bank of America Merrill Lynch. "But if they lose 14,000 and if they export FX of US $ 5000, I think the strategy is going to be tough and difficult