Economists Say Dollar Strength Is More Worrisome Than Inflation For Asia. Jakarta Managing director at DBS Bank in Singapore, Taimur Baig said, the weakening of the exchange rate in the face of a strong US dollar is a bigger concern for Asian countries than inflation.
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“We’re not too worried about policies driving inflation, but exchange rate weakness, dollar liquidity drying up, those are the bigger issues,” Baig told CNBC Asia’s “Street Signs.” .
Baig said there was “room and need” for Asian countries to support their economies through fiscal policy.
“On the monetary policy side, unfortunately there is no pause. They have to raise interest rates to slow down the economy to keep the current account sustainable,” Baig said.
“So this is why even a country like India, which is a darling of investors these days, I think still faces huge challenges going into 2023, and of course, the other big headwind in Asia is China, for its own unique reasons.”
Economists Say Dollar Strength Is More Worrisome Than Inflation For Asia. Separately, IMA Asia managing director Richard Martin said the dollar was nearing its peak. Many central banks from better emerging economies will continue to increase interest rates in anticipation of more tightening in the US.
“As they closed that yield gap, the extra push into US dollar assets started to subside again,” Martin said.
He added that he did not expect emerging market currencies, but rather that some of them fell 6 percent to 8 percent over the past year. He expects the currency to start rebounding to its previous level early next year.
