Devaluation of multinational currencies

Recently, the talk of "Asian currency war" has suddenly "quietly prevailed" in the domestic financial circle, which refers to the recent general weakening of the domestic currencies of major Asian economies:
For example, the exchange rate of the yen against the US dollar "returned to the lowest level in 20 years",
The exchange rate of the Korean won against the US dollar once entered a "free fall" depreciation track,
The Indian Rupee also fell to an all-time low,Our RMB is also under considerable depreciation pressure.



Yen
On May 23, the data released by the Bank of Japan showed that the real effective exchange rate of the yen fell to 60.9. According to the estimation of the Bank of Japan, this is the new low in the past 51 years.
Over the past three months, the yen has been the weakest among the currencies of the group of 10 (including 11 countries including Belgium, the Netherlands, Canada, Sweden, France, Switzerland, Germany, the United Kingdom, Italy, the United States and Japan).
Since March this year, the yen has depreciated by 11% against the US dollar. In fact, the yen has been in a long depreciation cycle in the past decade. Today, the dollar is 128 yen, compared with 77 yen a decade ago, the yen has depreciated by nearly 50%.


South Korean won
The Korean won has fallen 7.7% against the US dollar this year, making it one of the worst performing currencies in the Asian market. In April, the exchange rate of the Korean won fell by 3.5%. On May 12, the exchange rate of the Korean won fell by 1% to close at 1288.50 won against the US dollar, the lowest closing level since July 2009. At that time, South Korea was in the throes of the global financial crisis.
The depreciation of the Korean won will lead to an increase in import prices, which will further worsen inflation. The Bank of Korea said that the import price index in March was 148.80, the highest since relevant statistics began in January 1971, up 7.3% from February and 35.5% from the same period last year.



India rupee
In april2020, the Indian Rupee exchange rate hit a record low of 76.9088 rupees to the US dollar, but this record has been set this year. Now the rupee exchange rate is approaching 78. Even though the Central Bank of India tried to prevent the rupee from further depreciation by "surprise" raising interest rates at the special meeting, it has failed to recover the decline for the time being.
According to people familiar with the matter, the Indian government is considering spending an additional INR 2trillion (US $26billion) in fiscal year 2022/23 to mitigate the impact of rising prices on consumers.



euro
Over the past 20 years, the exchange rate of the euro against the US dollar has never fallen below one to one.
Since the beginning of this year, the exchange rate of the euro against the US dollar has fallen all the way. Since the end of April, the exchange rate of the euro / US dollar has been hovering around 1.05, once falling to the lowest level in five years.
In fact, over the past year, the exchange rate of the euro against the US dollar has fallen again and again. The decline reached 7% in one year. On January 6, 2021, 1 euro can still be exchanged for us $1.23. In mid November of that year, the exchange rate has dropped to US $1.12.
Over the past few months, Europe has been facing high inflation, and more and more voices have begun to support the European Central Bank to take measures to deal with it. Some analysts believe that the European Central Bank's hesitant and inaction attitude has also facilitated the decline of the euro to a certain extent.
On May 23 local time, ECB president Lagarde published an article entitled "normalization of monetary policy in the euro zone" on the official website of the ECB, and finally made it clear that the ECB would decide to raise interest rates at the monetary policy meeting in July this year.



pound
Over the past year, the exchange rate of sterling against the US dollar has changed from 1.41 to 1.26, and once fell below 1.22, reaching the lowest since may2020. So far this year, the pound has fallen 8% against the US dollar.
According to the British National Bureau of statistics, driven by food and energy prices, the UK consumer price index (CPI) in April jumped sharply to 9% from 7% in March, the highest increase since 1982. The world bank has warned that Britain's GDP growth is expected to decline significantly in the fourth quarter of this year.



Swiss Franc
The Swiss Franc has always been a strong representative for a long time, but this year, the exchange rate of the Swiss franc against the US dollar has depreciated by more than 8%, which is the first time it has fallen to parity with the US dollar since 2019. However, as an export-oriented country, devaluation has always been the demand of the Swiss central bank. Therefore, since March, the Swiss central bank has not regulated the depreciation of the Swiss franc.



Influenced by the Fed's continued interest rate hike, the US dollar index has risen by 7% since January this year, the highest in two years. Considering that reducing inflation is the main goal of the Federal Reserve at present, the continued appreciation of the US dollar will help reduce the price of imported goods (the purchasing power of the US dollar becomes stronger), supporting the US demand for overseas goods. However, for emerging market countries, the continued rise of the US dollar may further push up domestic inflation (a large number of commodities are denominated in US dollars) and consume the capital of relevant countries.