Asia Times Online, 12 Mar 2009, Shawn W Crispin
BANGKOK - Southeast Asian leaders gathered in Thailand this month vowed collectively against a lurch towards protectionism to cushion their trade-geared countries against rising global economic turbulence. What they failed to rule out were competitive currency devaluations in a race to the bottom for export market share.
Regional central banks say publicly that they have no intention of managing their currencies lower. Indeed, many have committed billions of dollars in reserves over the past year to maintaining particular currency moving averages. But some financial analysts believe a tit-for-tat momentum is building among regional countries that compete for the same export markets and that the potential for full-blown competitive devaluations will grow as the impact of lost export receipts drives up unemployment and unleashes other negative second-round effects, such as asset price deflation, on regional economies.
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