Weaker dollar may boost Asian exports<\/p>\n
SINGAPORE (AFP): The prolonged weakness of the U.S. dollar is
\nmaking Asia's exports more competitive and drawing more direct
\nforeign investment to the region, British brokerage Crosby
\nSecurities said yesterday.<\/p>\n
But other analysts say Asian manufacturers, most targeting the
\nU.S. market, could suffer a competitive disadvantage, although
\nthe greenback's fall had at least temporarily arrested fears of
\ninflation spreading to the region.<\/p>\n
"In general, U.S. dollar weakness benefits Asia's economies
\nstrongly through increased currency competitiveness for exports
\nand heightened attractiveness to foreign investors," Crosby said
\nin its latest Asian quarterly economic review.<\/p>\n
Crosby's assessment was based on the impact the recent decline
\nin the U.S. dollar would have on the real effective exchange
\nrates (REER) of the region's currencies.<\/p>\n
It said studies showed that exports in seven Asian countries
\nresponded strongly to changes in REER, a trade-weighted exchange
\nrate index, influenced mainly by short-term U.S. dollar
\nmovements.<\/p>\n
The studies covered China, Hong Kong, Singapore, Malaysia,
\nThailand, Indonesia and the Philippines.<\/p>\n
Crosby said that the increased competitiveness of Asian
\ncurrencies combined with accelerating world trade and renewed
\ndemand in industrial nations would bolster Asian exports in the
\n12 months from June this year.<\/p>\n
Chan Kok Peng, an economist with British investment house
\nSmith New Court (S) Pte. Ltd., however, believes that the REER
\nwas not a "fool-proof" method of gauging Asia's export
\ncompetitiveness.<\/p>\n
Factors<\/p>\n
"It all depends on what key economic factors are used against
\nthe index. For instance studies have shown that using consumer
\nprice index and unit labor costs separately could give different
\nresults," Chan said.<\/p>\n
But Chan agreed that the U.S. dollar would continue to be weak
\nin the long-run.<\/p>\n
"I cannot see how the greenback can strengthen given that the
\nU.S. trade position is still weak while domestic demand is
\nincreasing on the back of increasing imports," he said.<\/p>\n
The United States and Europe are the two largest export
\nmarkets for most Southeast Asian economies.<\/p>\n
Because these economies manage their currencies against the
\nU.S. dollar their external accounts are directly geared to the
\ngreenback's movements, analysts say.<\/p>\n
Almost all of Hong Kong and Singapore exports to the United
\nStates and Europe comprise manufactured goods against 74 percent
\nfor Malaysia and 40 percent for Indonesia.<\/p>\n
Crosby said that Southeast Asia was already gaining from the
\nfall in the U.S. dollar, which was drawing more direct
\ninvestments to the region.<\/p>\n
Besides the declining dollar, Asia's other pluses included
\ngreater stability of input costs, currency movements and rapid
\nderegulation.<\/p>\n
Bruce Rolph, head of research at Salomon Brothers Singapore
\nPte Ltd., said generalizations about Asia's export
\ncompetitiveness in relation to the U.S. dollar could be
\ndangerous.<\/p>\n
"A weakening U.S. dollar increases the import cost of Asian
\ngoods into the U.S., whose exports would be cheaper. As such,
\nregional manufacturers destined for the American market would
\nsuffer a competitive disadvantage," he said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/weaker-dollar-may-boost-asian-exports-1447893297",
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