Asian Currency Crisis Looms Large in the Next 5 Years!

An Asian currency looms large in the next 5 years. Most of the Asian Currency are undervalued. These countries are heavily depended on exports to developed countries for their growth. To spur growth and elevate their country performance in the short term they resort to currency devaluation. Though this strategy work in the short run, it has delipidating effect on the economy in the long run. The devaluating of currency is very widespread practise among most of the Asian currencies and brings short term growth without any intrinsic benefits to the country. Though there will be lots of economic activity this leads to no value addition to the economy. Infact practised excessively it means transfer of wealth from the countries to the other countries.

Keeping the currency devalued means that the intrinsic strength of the currency is reducing over a time period and without any positives for the domestic currency. Many of these currencies are interlinked therefore a sudden external shock to the economy will have devastating effect on most of the countries of the region. The Domino effect can put the whole world in a great world economic turmoil.

As the Asian currency remain devalued the purchasing power of the inhabitants of the region are vastly reduced. Leading to low standard of living for the people of these region. Without any economic value addition this leads to artificial growth propulsion and ultimately leading to unsustainable high inflation, high interest level. The Private Sector will experience unsustainable low profitability but high revenue. The countries will experience high unsustainable debt leading to fall of the countries. Any fall in single small country of the region will lead to Domino effect on all the currency of the region as most of the currencies are interlinked.

This Asian Currency Crisis was manifested in 1997 and present economic practises may lead to repeat of the same debacle in the next 5 years. The Asian Currency Crisis started in a small country of Thailand but had a Domino effect on most of the currencies of the region.