The Japanese yen plunged to 160/$, its weakest since 1990, after the Bank of Japan (BOJ) held rates at -0.1%, igniting a regional race to devalue currencies.
Central Bank Actions:
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South Korea: shocked markets with a 25 basis-point rate cut to 2.75% explicitly targeting export-sector relief.
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Thailand: cut rates 50bps to 0.5% to revive tourism.
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India: held rates at 6.5%, but the rupee nonetheless tumbled to a historic low of 85/$ on outflows.
Market Fallout:
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Carry Trade Revival: Hedge funds target high-yield Indonesian bonds (7.5% returns).
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Gold Rally: Prices hit $2,500/oz as investors flee fiat currencies.
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Import Inflation: Japanese households face 15% hikes in food and energy costs.
Political Pressure:
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U.S. Criticism: Treasury Secretary warned against “competitive devaluations.”
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ASEAN Emergency Talks: mulled currency swaps to stabilize the baht (-3%) and ringgit (-2.5%).
Analyst Take:
“Asia’s central banks are trapped between growth and stability,” said HSBC’s Frederic Neumann. “The Fed’s rate cuts can’t come soon enough.”
