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ASEAN currencies fall as dollar debts rise

東協貨幣重貶 美元債務激增

Bloomberg has reported a steep decline in the value of Southeast Asian currencies last month, seeing them sink to a 10-year low. The slide in local currencies — which includes those of Malaysia, Indonesia, the Philippines, Singapore and Thailand — means that the service cost of overseas debt denominated in US dollars for regional businesses, banks and governments has rocketed. Next year, Southeast Asian currencies will have to spend 8 percent more repaying their US dollar bond debt — an increase of almost US$20 billion.

The depreciation of Southeast Asian currencies against the dollar and the resulting mushrooming in the cost of overseas borrowing is reminiscent of the situation prior to the 1997 Asian Financial Crisis, which was later dubbed by economists Barry Eichengreen and Ricardo Hausmann as “original sin.”

As of last Wednesday, since the beginning of this month the Malaysian ringgit has crashed by approximately 6.3 percent, while the Indonesian rupiah has fallen almost 3.7 percent, the Philippine peso by nearly 2.7 percent, and the Singaporean dollar by almost 2.5 percent, while the Thai baht has fallen by approximately 1.6 percent.

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