The Yin and the Yang

Weakness in the US dollar is set to ease debt-servicing costs and reduce incentives to hold dollar interest bearing assets, and thereby relieve the downward pressure on ASEAN currencies, say HSBC economists in their latest report on Asian currencies. However, declining export growth rates, external debt, political uncertainty and financial and corporate restructuring in most ASEAN nations means that domestic economies are likely to remain weak, hence mitigating the positive effect of the weakening dollar.