Currencies across Asia are strengthening against the U.S. dollar faster than the yuan, making China more competitive in relation to its neighbours, reports the Wall Street Journal.
According to the Journal, Asia's exports have thrived over the past decade because of low exchange rates. But the strengthening of currencies across the region are exacerbating worries about export competitiveness. South Korea, Thailand and Singapore have all seen their currencies rise about 3% against the yuan since China's June 19 announcement that it would allow the yuan to appreciate. To protect their economic recovery, these countries have decided to routinely intervene in currency markets to adjust their currencies, notes the Journal.
Japan, which has been staying out of currency intervention, is near its highest point against the Chinese yuan. But economists believe that an intervention could be Tokyo's only solution to its currency predicament. According to the Journal, Japan has a much bigger problem given that the yen market is among the world's largest, with daily turnover of US$568 billion.
On Thursday, the yuan ended at 6.7248 per U.S. dollar, its strongest since the currency began trading in 1994.
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