First, since April, the exchange rates of Japanese yen, Thai baht, Indonesian rupiah and other currencies have collectively plummeted under the sharp fall of the US dollar. The exchange rate of the yen against the US dollar even fell below the 160 mark, hitting a 34 year low.

Subsequently, many governments took emergency measures to "rescue the foreign exchange", and the exchange rates of Japanese yen, Korean won and other currencies against the US dollar were adjusted. A "currency defense war" began.

Where will Asian currencies go? How does the RMB respond to this round of shocks?

Strong US Dollar "Breakthrough" Asian Multi national Currencies

"It has not been so 'cost-effective' to exchange yen for a long time. Compared with the beginning of the year, it can now cost 50 yuan less for every 10000 yen exchanged. My living expenses are also about 10% less than before." Xiao Lv, who studied in Japan, told Zhongxin Finance and Economics.

It is not just the yen. Since April, Asian currencies have been caught in a "devaluation storm" against the US dollar. As the US dollar index rose from 104 to 106, the exchange rates of Indian rupee, Indonesian rupiah, Korean won and Thai baht against the US dollar fell sharply, falling below 83.5, 16000, 1400 and 37 in the middle and late April.

The dominant factor behind the "double sky" between Asian currencies and the US dollar is the strength of the US dollar.

Mitul Kotecha, head of Asian foreign exchange and emerging market macro strategy at Barclays Bank, pointed out in his analysis that "most Asian currencies are having to yield to the strength of the US dollar. Driven by the rise in US bond yields and the warming of market risk aversion, the US dollar has generally strengthened in the foreign exchange market, leading to the decline of Asian currencies."

"In addition, the inflation and employment data of the United States in March exceeded market expectations. The Federal Reserve delayed interest rate cuts and will keep interest rates high for a longer time. The stronger dollar has increased the pressure of capital outflows from emerging economies, which has exacerbated the risk of currency depreciation in Asia Pacific and other emerging economies." Wang Youxin, a senior researcher of the Bank of China Institute, said in an interview with China News Finance.

In addition to the external factor of the US dollar, the economic growth of some Asia Pacific countries is weak, and it is difficult to provide internal support for the stability of their own currencies.

Wang Youxin mentioned that under the background of weak global economic recovery and increased uncertainty, the growth pressure of Asia Pacific emerging economies is becoming prominent. At the same time, the export trade of some Asia Pacific countries has declined since last year, and the trade surplus and foreign exchange income have decreased, which has put pressure on the devaluation of their currencies.

Many Asian countries take the "rescue"

Money and economy are inseparable. When Asian currencies suffered a huge earthquake, concerns about the Asian economy were also growing.

"Exchange rate depreciation and capital outflow will not only raise import prices, but also bring pressure on domestic liquidity, credit financing, etc., and increase the risk of economic downturn", Wang Youxin said that, especially for countries such as Japan, which rely heavily on imports, the negative impact of currency depreciation should not be underestimated.

Under the sense of crisis of currency collapse, some Asian countries have realized the severe situation and started to "rescue" foreign exchange.

For example, the South Korean government said that it was highly alert to the exchange rate market. The central bank of Indonesia even more directly ended up raising interest rates and buying local currency to intervene in the exchange rate. Although the Japanese authorities did not explicitly express that they would take action, many Japanese media reported that the government had continuously intervened in the market on April 29 and May 2, totaling about 8 trillion yen (about 375.4 billion yuan).

After the official move, although the exchange rate of most Asian currencies against the US dollar is still low, the performance of Japanese yen, Korean won, Thai baht and other currencies has rebounded.

For example, after hitting a new low of 160, the yen rebounded to around 153 against the dollar on May 6. Han Yuan rose to around 1359, and the Thai baht also slightly retreated to less than 37.

How to deal with RMB

Although there has been some improvement, in the opinion of experts, the final effect of Asian countries' "foreign exchange rescue" is still unknown. Asian currencies may continue the "roller coaster" trend.

Taking the yen as an example, Wei Wei, the assistant director and chief strategic analyst of Ping An Securities Research Institute, believes that the intervention of the Japanese authorities will be effective in the short term, but will not promote the reversal of the yen trend, more to slow down the rate of yen depreciation, and the key to this round of yen trend lies in the monetary policy shift of the Bank of Japan and the situation of the US dollar.

Goldman Sachs analyst Danny Suwanaputi also believes that the theme dominating the Asian macro market is the policy path of the Federal Reserve and its impact on the benchmark interest rate of the United States and the dollar.

It is worth mentioning that during the current round of Asian currency shocks, the RMB exchange rate was particularly stable and did not fluctuate significantly.

Wang Youxin said that the stability of the RMB value has internal supporting factors.

"On the one hand, China's economic recovery is accelerating and consumption and investment are growing steadily, which to some extent has hedged the fluctuations of the RMB exchange rate caused by external factors. On the other hand, China has sufficient foreign exchange reserves and a sound policy tool system, and is able to maintain the stability of the RMB exchange rate." Wang Youxin said.

In April this year, Zhu Hexin, Vice President of the People's Bank of China and Director of the State Administration of Foreign Exchange, said at the press conference of the State Council Information Office that the goal and determination of the People's Bank of China and the Administration of Foreign Exchange to maintain the basic stability of the RMB exchange rate will not change. The RMB exchange rate has a foundation and conditions to maintain basic stability.

In addition, Zhongxin Finance and Economics noticed that with the exchange rate of yen and other currencies falling to a low point, some investors are focusing on foreign exchange financing, such as purchasing currency at a low level through bank settlement and sales of foreign exchange. In this regard, insiders said that this wave of Asian currency exchange rate changes may not have "bottomed out", and investors need to fully consider the risk of market fluctuations and the acceptance of potential income levels, and invest cautiously.