If Asia really is in the midst of a new currency war, then the hard part will be identifying any winners.
A number of analysts billed China’s move to weaken the renminbi last week as an attempt to boost exports by making its products more competitive. Data a few days earlier had shown Chinese exports sinking more than 8 per cent in July, while the real effective exchange rate of the renminbi had just hit a record high.
However, China’s export problem is not simply one of increased international competition — it is also a case of lacklustre global demand. Despite improving economic activity in the US and Europe, exports from across Asia have yet to see a lift, leaving policymakers with scant tools to respond.
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