Currencies
Yen’s Fragility Raises Specter of a New Currency War in Asia
- Further Japan currency weakness seen as potential trigger
- How Beijing manages yuan will be key to regional stability
The yen fell to its lowest since 1992 against the yuan in late April.
Photographer: Akio Kon/BloombergThis article is for subscribers only.
As the yen plumbs new lows, some investors are pondering an almost unthinkable scenario in a region busy bolstering falling exchange rates — a series of competitive devaluations that starts a new Asian currency war.
Suspected intervention to drag the yen off a 34-year low against the dollar is already seen as unlikely to have a lasting effect if Japan continues alone, raising the prospect of another bout of weakness in the beleaguered currency. That could push competitive tensions with exporting neighbors South Korea and Taiwan to a peak — and heap pressure on China where chatter is already growing about the potential for a yuan devaluation.