2point6billion.com 40% of the world’s population. 100% relevant. ASIAN CURRENCY PROTECTIONISM Who’s Pegging Who? An Examination of Asia’s Currencies, Pegs,Inflation Rates and Current Global Valuations Asian Currency Protectionism Who’s Pegging Who? An Examination of Asia’s Currencies, Pegs, Inflation Rates and Current Global Valuations [ By Chris Devonshire-Ellis, Dezan Shira & Associates ] s strains are caused in global NPR. In March 2009 the Indian Finance 1 RUB. Kazakhstan was the last of the Acurrency relationships due to trade Ministry launched a public competition CIS countries to issue its own currency, imbalances and the on-goings effects of to select a symbol for the currency. The in 1991 following the breakup of the the global economic crisis, the role of Indian rupee is also accepted in towns of Soviet Union. The word tenge in the the U.S. dollar as a currency peg in some Nepalese side of the border, while some Kazakh language means a set of scales. parts of Asia and the emergence of other Indian shops in the United Kingdom The origin of the word is the Turkic word regional currencies is having an impact on will also accept rupees. The rupee is teğ, which means being equal, balanced. global trade. In this special report we look commonly valued against the U.S. dollar The current rate against the U.S. dollar at which Asian currencies are pegged and and the British pound. The current rate is 149. Inflation is currently running at by and to whom, including all neighbors of against the U.S. dollar is about 46.5. about 8.7 percent. China and India. An executive summary Inflation in India is currently running at appears at the completion of this data. 11.49 percent. Kyrgyzstan: Som (KGS) China: Yuan (CNY) Central Asia Afghanistan: Afghani (AFN) The Kyrgyzstani som is unofficially pegged to the Russian ruble at par. In the The Chinese yuan, or “Renmenbi” old Soviet Union, speakers of Kazakh, (people’s money) as it is commonly The Afghani has no pegs, but is commonly Krygyz and Uzbek called the ruble known in China is linked to a “basket” valued against the U.S. dollar and the som. The word som means “pure” of currencies, including the U.S. dollar, Pakistani rupee. The use of the Afghani in these languages as well as Uighur, Euro, British pound, Japanese yen, South in international settlements involving and implies “pure gold.” Kyrgyzstan’s Korean won, Singapore dollar, Malaysian Afghanistan trade has now increased and inflation rate is running at about 24.5 ringgit, Russian ruble, Australian dollar, taken precedence over the U.S. dollar percent. Thai baht and the Canadian dollar. and Pakistani rupee as the currency has However, the yuan’s performance against stabilized. Prices in Afghanistan have Mongolia: Togrog (MNT) that basket over the past two years should been solely denominated in Afghanis have shown a depreciation of the RMB since October 1, 2009. The current if this were truly the case. In reality, the rate against the U.S. dollar is 48.91. yuan has been unofficially pegged to Unofficially, the Afghani is linked to the primarily the U.S. dollar since July 2008 Indian rupee at par. Inflation is running at at a rate of 6.83 within a minor permitted around 13 percent. fluctuation band. The official inflation rate in China is said to be closer to 4 percent. Kazakhstan: Tenge (KZT) The Mongolian togrog is not pegged, although it is commonly linked to the India: Rupee (INR) Russian ruble. Genghis Khan appears on the higher value notes, and the founder of modern Mongolia, Sukhbatar, on the lower values. The current rate against the ruble is 47, while inflation is currently running at 8 percent. The tenge is not officially pegged, Russia: Ruble (RUB) Pegged by the Bhutanese Ngultrum at although it is constantly valued against The ruble is not officially pegged but par and the Nepali Rupee at 1 INR to 1.6 the Russian ruble at a rate of 5 KZT to remains the currency of the Russian 2 2point6billion.com Asian Currency Protectionism Federation and the two partially has also been pegged by the Afghani to in 1974. India was key in assisting the recognized republics of Abkhazia and provide security against the new Afghan Bhutanese government as it developed South Ossetia. It is also commonly used currency although this has subsequently its economy in the early 1960s. When as a benchmark to value other ex-Soviet ceased in the wake of a disastrous 2008 the ngultrum was introduced, it retained states currencies and remains a dominant performance by the Pakistani rupee when the peg to the Indian rupee which the player within Central and Northeast Asia. it lost 23 percent of its value in eight Bhutanese rupee had maintained. The The current exchange rate with the U.S. months. The current rate against the ngultrum does not exchange independently dollar is 30.38, while inflation is currently U.S. dollar is 84.07, while the inflation with other nation’s currencies but is 9.1 percent. is running at 18.5 percent. interchangeable with the Indian rupee. The inflation rate is currently about 4.9 Tajikistan: Sonomi (TJS) Sri Lanka: Rupee (LKR) percent. Maldives: Rufiyaa (MVR) The sonomi was introduced in 2000 and is not pegged. Tajikistan is landlocked The Sri Lanka rupee is not pegged to any and is the smallest nation in Central Asia currency but is frequently valued against by area. In 2008, the harshest winter in the Indian rupee and the British pound. The currency is pegged to the U.S. dollar a quarter century caused financial losses Sri Lankan bank notes are unusual in that at a rate of 12.8 to the U.S. dollar. The of US$850 million. Russia pledged US$1 they are printed vertically on the reverse. earliest form of currency used in the billion in aid, while Saudi Arabia sent The unofficial linked rate with the Indian Maldives was cowrie shells (Cypraea about 10 planes carrying 80 tons of relief rupee at 2 to 1 Indian rupee, while the U.S. moneta) and historical accounts of and emergency supplies in February and dollar is at 114.22. Inflation is currently travelers indicate that they were traded in another 11 tons in March. The sonomi is running at 17.5 percent. this manner even during the 13th century. commonly valued against the Russian The explorer Ibn Batuta observed that ruble and is currently at 0.15 to the ruble. East Asia more than 40 ships loaded with cowry The inflation rate is currently running at shells were exported each year. A single Hong Kong: Dollar (HKD) 20.5 percent. gold dinar was worth 400,000 shells. The South Asia current inflation rate is 11 percent. Bangladesh: Taka (BDT) Nepal: Rupee (NPR) The Hong Kong dollar is pegged with the US dollar in a small trading band of The Nepalese rupee is pegged to the between 7.75 to 7.85 to the U.S. dollar, The taka replaced the Pakistani rupee Indian rupee at a rate of 1.6 to the Indian and also by the Macau Pataca at a rate in 1972 following the civil war with rupee and has maintained this position of 1.03 Patacas to 1 Hong Kong dollar. Pakistan. It is not pegged but is commonly since 1993. The exchange rate to the It is also commonly valued against the valued in comparison to the U.S. dollar. U.S. dollar is 74.55. Inflation is running Chinese RMB. The currency is managed The current rate against the U.S. dollar is at 14 percent. by the Hong Kong Monetary Authority 69.2. The inflation rate is currently 5.39 who maintain exchange rate stability percent. Pakistan: Rupee (PKR) within the framework of the linked No pegs, although it was previously exchange rate system. The important Bhutan: Ngultrum (BTN) pegged to the U.S. dollar until 1982. underpinnings of the linked exchange The ngultrum is pegged to the Indian It is still commonly valued against the rate system include the strong official rupee at par. The currency was introduced U.S. dollar, while the Pakistani rupee reserves of Hong Kong, a sound and 2point6billion.com 3 Asian Currency Protectionism robust banking system, fiscal prudence and the Bank of Trade issues a separate and a flexible economic structure. In this currency for visitors, like many other way, China’s management control of socialist states much as China used the yuan position is unofficially linked to do with its old FEC system. North directly to the U.S. dollar through the Korea has two varieties of foreign Hong Kong dollar peg, a situation that has exchange certificates, one for visitors lead to some criticism of the continuation from “socialist countries” which are of the Hong Kong dollar peg to the U.S. itself. The Monetary Authority of Macau colored red, and the other for visitors from dollar. Jim Rogers, a partner in George has a statutory obligation to issue and “capitalist countries” which are colored Soro’s Quantum Fund, has previously redeem patacas on demand against the blue/green. It is illegal to take any North said that the Hong Kong government Hong Kong dollar at a fixed exchange Korean currency out of the country, while should adopt the RMB as the official rate and without limit. The name pataca many cross-border transactions are settled currency of the territory when the RMB was derived from the Mexican peso, in hard currency – yuan, U.S.