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27 Mar 2013
Forex Flash: Weak Yen has implications for EM - BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman analysts believe that a weaker Yen will have implications ahead for Emerging Market currencies.
They feel that the weak yen will have uneven effects across EM, but the largest impact will be felt be Asia. They note that EM countries that have the most similar export structure to Japan are Korea and Taiwan, and so exports from these countries will lose the most competitiveness in a weak yen environment. Other EM countries that will be hurt by the weak yen include Thailand, China, and Singapore, but to a much lesser extent than Korea and Taiwan. Malaysia and the Philippines do not have a similar export structure to Japan, and neither does India and Indonesia. That said, They write, “We think that the bulk of the yen weakness has already been seen and that major EM exporters will adjust accordingly. It is only under a scenario where excessive yen weakness continues that we would start to worry about countries like Korea and Taiwan.”
They feel that the weak yen will have uneven effects across EM, but the largest impact will be felt be Asia. They note that EM countries that have the most similar export structure to Japan are Korea and Taiwan, and so exports from these countries will lose the most competitiveness in a weak yen environment. Other EM countries that will be hurt by the weak yen include Thailand, China, and Singapore, but to a much lesser extent than Korea and Taiwan. Malaysia and the Philippines do not have a similar export structure to Japan, and neither does India and Indonesia. That said, They write, “We think that the bulk of the yen weakness has already been seen and that major EM exporters will adjust accordingly. It is only under a scenario where excessive yen weakness continues that we would start to worry about countries like Korea and Taiwan.”