Patrick Bennett

The Asian economic model under threat 9 October 2009 the weakness of the U.S. dollar without any doubt is one problem not less to global economic stability. The inflationary pressures that will emerge as soon as the global economy stabilizes, is a topic of great concern considering the continuity of the economic recovery. In Asia, the weakness of the U.S. currency threatens the continuity of the economic model of growth through the external sector. Can Asian economies sustain the competitiveness of their currencies? What risks will emerge from this situation? One of the keys to explain permanent trade surplus seen Asian economies is their currency competitiveness against the U.S. dollar. The change of scene derived after the crisis portends a weak dollar for quite some time how will Asian economies to cope with this situation? In the Pacific region to exchange rate appreciation pressures are becoming feel. In Australia, the Central Bank decided start the cycle of rates hikes with a reference of a quarter point interest rate increase, which impact significantly on the type of change. This increase in the Australian dollar exchange rate pressures generated a kind of effect contagion on Asian currencies. So the authorities of Korea of the South, Taiwan, the Philippines and Thailand had to leave to intervene its exchange markets to prevent a dangerous strengthening of their currencies in regard to their competitiveness. Societe Generale strategist Patrick Bennett was referring to what is happening with investors: investors need little encouragement to extend its sales of dollars. Any sign of weakness in the U.S. economy or any sign of a change in monetary policy from the rest of the country is enough to bet against the U.S. currency. Asian currencies are being subjected to a buyer in the short-term rally, against which are fighting their authorities. The expectation of investors that the Asian countries are leading the recovery of the global economy, leads them to change their positions and increase their portfolios of assets of that continent.