Asia's FX Doom Loops

Expect an ugly open to Asian markets on Monday as investors try

to shield themselves from the fallout from the widespread selling 

that battered stocks, bonds, and currencies on Friday. The historic 

rout in UK bonds and sterling took center stage on Friday but at the 

heart of the gloom shrouding world markets is the Fed's drive to raise 

rates far higher than most people had bargained for, and the effect that

is having on global rates. And the dollar. The dollar's 'wrecking ball' 

status is being painfully felt in Asia, where several currencies have sunk

to multi-year or record lows, and central banks have intervened to try 

and stop the rot. On Friday, India's rupee hit a record low, Indonesia's 

rupiah and China's yuan fell to their weakest levels since mid-2020, the

Thai baht slumped to a 16-year low, and South Korea's won hit a 13-year

trough. Falling currencies increase inflationary pressures, forcing 

policymakers to turn more hawkish, tightening financial conditions, and 

crushing demand. Central banks will find it hard to break this doom loop.