Letters to the Editor
From Japan to South Korea and India, Asia’s policy makers are stepping up the defense of their currencies as the dollar’s rally shows few signs of easing. Bank Indonesia has also deployed its own version of Operation Twist — selling short-term notes and buying up longer ones — in an effort to shore up the rupiah.
“It seems like many Asian central banks have become more aggressive in trying to reduce downside pressure on their currencies,” said Mitul Kotecha, head of emerging-market strategy at Toronto Dominion Bank in Singapore. “However, it’s a hard battle given ongoing USD strength.”
Bank Indonesia had spent $4.21 billion of its foreign-exchange reserves in July as it sought to limit the rupiah’s losses amid the nation’s widening rate gap with the US.
There are two dollar markets. The US Mainland dollar, the FEd controls it and Biden makes giveaways to politicians and UBI to the people during COVID. There is also the Eurodollar market, based out of Europe and RoW. Essentially banking cannot resist the opportunity make loans anywhere and the Banks outside the US also make loans in dollars that don’t exist in the USA, hence there are onshore and offshore dollars. The two must resolve in terms of XR prices, and interest rates. The dollars in Asia are likely repayable to local banks, to banks in Europe but not necessarily… Read more »
MacroVoices #343 Jeff Snider: Why the Dollar Remains King