Focusing solely on the performance of Hong Kong domestic exports is equally misleading. As the Chinese economy begins to accelerate along with the pick-up in exports, the Hong Kong economy will follow suit. The consequence of their devaluation in 1997 may have made East and Southeast Asian exports performance improve, but the total dissolution of their critical mass of valuable resources and capital has drastically lowered their living standards for years to come. The need to service their hefty foreign debts with hard-earned income generated from exports, notwithstanding their relatively strong growth, will continue to cap the upside of their respective currencies. Thai baht and Korean won are 2 examples.
Indonesian rupiah suffers further from capital outflow because of political instability.
All rights reserved.