For RMB devaluation, please read our previous post, http://sg-stock.blogspot.sg/2016/11/high-interest-rate-environment-is-coming.html for more information.
Asian currencies are depreciating because of USD rises. USD is rising because of the expected interest rate increases in December 2016 and also in 2017.
Funds are leaving Asia and flowing to USA because of higher investment yields due to higher interest rates. Therefore, countries with lower foreign reserves will suffer more depreciations. This can be seen from SGD vs MYR. Due to the anticipated interest rate movements, fund managers will be dabbling in interest related derivatives whereby USA has the most liquid market because of arbitrage opportunities. This explains why funds are pulling out of Asia and moving to USA.
Business and investment costs will go up soon in Asia and these will create inflations. Subsequently, the vicious interest rates cycle will begin to form in the world until recession takes place.
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