Many Asian currencies have risen against the U.S. dollar this year, making exports more expensive and their foreign exchange reserves less valuable. But economists say regional governments should not be too worried about the trend. Kate Woodsome has more from VOA's Asia News Center in Hong Kong.
The Philippine peso rose to its highest level against the U.S. dollar in seven years this week, while the Singapore dollar hit a 10-year high. In India, the rupee has risen 12 percent this year. The Indonesian rupiah, South Korean won, Taiwan dollar and Thai baht also have strengthened steadily.
Song Seng Wun is a regional economist for CIMB-GK Research in Singapore. He says Asian governments are not taking aggressive measures to stop the trend.
"One lesson which everyone has learned since Asian financial crisis is it's better off to let the economic fundamentals drive the value of your currency," Song said.
In July 1997, the Thai currency collapsed, leading to a regional financial crisis. Plunging currencies coupled with unsustainable levels of foreign debt and soaring interest rates threw Asian economies into a recession.
Now, Asia is booming. At the same time, worries about an economic slowdown and the mortgage crisis in the United States, are driving a wave of currency appreciation in Asia. The recent cut in U.S. interest rates also hurt the dollar.
A weaker dollar makes Asian exports more expensive for American consumers. But Song says Asian governments are not too concerned about rising export prices, in part because most regional currencies are in the same situation. That means no one country is being priced out of the market.
"There's been steady performance of various currencies against the dollar, against each other, they kind of offset one another to some extent. So at this point, not too serious a problem in terms of export competitiveness," Song said.
Song says a drop in exports to the United States also can be cushioned by shipments to Europe, Africa and Latin America.
He says Asian governments are benefiting from their currencies' appreciation because it allows them to purchase oil - which is sold in dollars - at a cheaper rate.
Countries also can buy U.S. goods for less. This helps import-dependent countries such as Singapore offset some of the rise in commodity prices.
David Mann, a senior currency strategist at Standard Chartered Bank in Hong Kong, says regional governments also could take advantage of the situation by selling local currency and buying dollars.
"By doing that, they also are able to build up foreign exchange reserves, which is a useful tool for creating stability, like a war chest if you would, which is useful in times of need when the opposite is going on, when the currency is selling off and they actually need to sell out some of those reserves," Mann said.
But in the long-term, Mann says Asian governments should encourage domestic consumption so their economies become less dependent on exports.