Many of Asia’s currencies are losing value against the U.S. dollar this year as China and the United States fight over trade, but analysts say policymakers are handling the dip better now than during past down cycles.

China, India, Indonesia and Myanmar, to name just a few, have seen their currencies lose value since the start of 2018. The Indian rupee hit an all-time low in June, and the Chinese yuan lost 3.2 percent over the year through June.

Economists point to a range of problems, including possible contagion from financial woes in Turkey and concerns about investing in Asia due to the Sino-U.S. trade war expected to hit China next week with tariffs on goods worth $16 billion.

“It’s just basically that everything we’ve worried about now and then sort of converged together,” said Song Seng Wun, an economist in the private banking unit of CIMB in Singapore.

But monetary authorities in Asia have learned from currency dips in 2013, 2015 and 2016, economists believe.

​Causes for decline

No single cause is pushing currency prices lower around Asia, analysts say. Rising oil prices have knocked back the rupee as Indians pay more to import it, media in the country say. Domestic media in Myanmar blame a surge in imports into the fast-growing Southeast Asian country, plus people’s hoarding of U.S. dollars.

In Vietnam, the brokerage Bao Viet Securities blames a 1.3 percent dip in the dong currency due to pressure from similar slips elsewhere in Asia, including the Chinese yuan’s devaluation and a 7 percent fall in the Indonesian rupiah as of June.

A particularly severe fall in Turkey’s lira along with inflation and loan defaults — all threatening to drag down other economies — is weighing on Asian currency rates, Song said.

Economists and media in the countries affected usually point to spillover from the Sino-U.S. import-export war as a chief cause. That dispute began unfolding in early 2018 as U.S. President Donald Trump said Beijing was trading unfairly.

In India, the trade war has dissuaded investors from taking positions in domestic assets, media reports there say. And in Vietnam, China’s devaluing of the yuan in June, possibly because of U.S. trade tension, cramps Vietnamese exports. A lower yuan helps Chinese exporters earn more on goods shipped to the United States.

“I think there’s a number of reasons why it could be going down,” said Maxfield Brown, speaking to the currency in Vietnam where he’s senior associate with the business consultancy Dezan Shira & Associates.

“I think [Vietnamese officials] are watching what’s going on between China and the United States, and it is a fact that the Chinese government has devalued its currency and that impacts the ability of Vietnam to export products. I think everyone’s watching the situation.”

​Coping strategies

Asian monetary authorities have gotten a grip on this year’s devaluations compared to what happened in 2013 as capital left Asia due to the tapering of economic stimulus in the United States, said Marie Diron, managing director with Moody’s Investors Service in Singapore.

Economic stimulus after the global financial crisis had inspired investors to buy assets in Asia where they grew relatively fast, tracking the region’s economic strength.

To shore up the rupiah, Indonesia’s monetary authority has raised interest rates four times in three months. Monetary authorities in India and the Philippines have raised rates this year, as well. Rate hikes generally raise the value of currencies compared to countries that keep rates down.

Asian countries are keeping more foreign currency in reserve and better controlling any budget deficits, as well, Diron said.

“Central banks have built up their foreign exchange reserve buffer, so they do have more ammunition, if you want, to at least smooth some of the currency volatility,” she said.

In Vietnam, mismanagement of currency in the past has taught leaders how to react, and they’re aiming for a “measured response” now, Brown said.

China is likely to nudge its currency back up along with budgetary stimulus for the economy, easing worries in other markets, the French investment bank Natixis said in a research note Friday.

Asian currency drops are unlikely to reach crisis levels, economists say. They’re not weak enough even to pose that threat yet, Song said.

In some cases, he said, trade-reliant nations such as many in Southeast Asia may fare better with weaker currencies because exporters would earn more money when converting their U.S. dollar earnings into local units.
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