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How vulnerable are other Asian currencies to yen weakness?

It is tempting to think that a further sharp fall in Japan’s currency would prompt policymakers in the rest of Asia to try to weaken their own in an effort to maintain their competitiveness. But there are several reasons why we don’t expect a wave of competitive devaluations across the region despite our forecast that the yen is set to slump by a further 17% or so against the dollar by the end of next year.

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