Undervalued Asian Currencies Face Scrutiny Amid Trade Imbalance

Major Asian currencies are facing scrutiny over their exchange rates as trade and current-account surpluses raise concerns about undervaluation. China, Japan, and South Korea have all run large surpluses in recent years, while the US has struggled with deficits.

The renminbi (RMB), yen, and won are seen as undervalued by some due to these imbalances. However, experts argue that foreign-exchange intervention is unlikely to be effective in addressing the issue.

According to Cambridge academics, 'the US should not squander the rest of its influence by demanding foreign-exchange interventions.' The emphasis is on addressing the underlying fundamentals driving these trade and current-account imbalances rather than relying on currency manipulation.