Are ASEAN currencies back onto a sliding movement this year? 2016 just started and local currencies are already showing signs of weakness, a movement which could have deep consequences for travel activities in and out of the region. The culprit behind the fall in local currencies? the Chinese Yuan that China lets going down in an attempt stimulate its faltering economy.
Last week saw the Yuan declining by 1% before gaining back from earlier losses. The Yuan devaluation seems limited. 1% is indeed very little. But it would probably have a negative psychological effect on Chinese consumption. News agency Reuters reported on Thursday that some internal Chinese sources are now expecting to see the currency fall by as much as 10 to 15% in a short period of time in a bid to stimulate the economy of Asia new giant. Some experts estimate that the Yuan could touch 7.5 to a dollar compared to 6.58 last week.
The news of a possible strong devaluation of the Yuan sent other currencies lower all across Asia. The Singapore Dollar hit last week a six-year low against the dollar while the Malaysian Ringgit lost its recent gains as it reached again RM 4.42 against the US currency. The Thai Baht is also heading towards an exchange rate of THB36.50 to one dollar, a level unseen since 2008.
While weaker currencies will make ASEAN more attractive to overseas travellers, devaluation could depress ASEAN outbound market. The most optimistic observers will say that Intra-ASEAN travel will not be really affected as exchange parity between ASEAN currencies will remain relatively stable…