The US dollar has taken a rough downturn in terms of its valuation. On Monday morning, the world woke up to a stark stock downturn as US markets bled red on fears of potential recession and WW3 looming over.
The downturn later crept into the cryptocurrency world, compelling Bitcoin to drop dramatically. As major global indices and cryptos took a hit, the US dollar catalytic drop further added fuel to the growing financial fire.
As several ASEAN nations depend on the US dollar for diverse trade proceedings, a weak US dollar may have specific key implications for the nations most reliant on it.
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ASEAN: Five Nations At Risk Due To Weak US Dollar
ASEAN, also known as the Association of South East Asia, has relied heavily on the US dollar.
Here are some key points:
- Reliance on USD: ASEAN nations depend on the US dollar for diverse trade proceedings.
- Exploring Alternatives: The bloc is currently exploring ways to evade the usage of USD due to:
- Weaponization of the dollar
- Bubbling US debt narrative
- Challenges: Finding a worthy alternative to the US dollar will not be an easy task.
- Current Usage: Despite the challenges, ASEAN continues leveraging the US dollar to manage its daily ordeals.
Impact on Global Finance
The weakening of the US dollar has triggered significant impacts in global finance:
- Speculatory Recession: The speculatory recession spree sparked an intense faceoff in global finance.
- Stock Market Impact: US stocks plummeted dramatically on speculations concerning recession and WW3, wiping away $2B worth of collective funds.
- US Dollar Valuation: The US dollar felt the tremors deeply, affecting its valuation:
- DXY index was trading at 102
- Slight recovery to 103 at press time
A weak US dollar can have several implications for certain ASEAN nations.
Impact on Indonesia
Indonesia, the largest ASEAN country, relies on dollars for several things. A weak US currency can prompt a capital flight in the nation, where consumers pivot to alternatives. This can lead to a regional economic downturn, impacting Indonesia’s global prestige.
Impact on Malaysia
Malaysia is often known as an export-centric economy. The weakening US dollar may significantly impact its competitiveness in this domain, selling Malaysian goods at cheaper prices. Malaysia also receives FDI from the US. A weak US currency can also affect foreign investments, weakening the Malaysian economy.
Impact on the Philippines
The Philippines is another nation at risk of potential market turmoil if the dollar weakens. A significant portion of the country receives remittances from the US. A weak USD can reduce these remittance inflows, and hamper cost debt servicing metrics.
Impact on Thailand
Thailand is a major tourism-governed economy. A weak USD may prompt tourists to pivot to other nations or lessen their spending, which can impact its economic status.
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Impact on Singapore
Singapore, the central financial hub of the world, may suffer the most from the weak US dollar. Singapore’s economy heavily relies on the US for trade, and a weak USD can impact trade narratives. A sharp decline in the USD can also impact Singapore’s financial markets and tourism.
