Andrea Kiguel and Eduardo Levy-Yeyati in this article argue that the fear of appreciation is back in emerging economies. While what they claim in this article is true to a large extent in the Indian case as well, what one doesn't understand is how much are the authorities willing to resist appreciation? Politically there is only a favourable climate to prevent appreciation and thus there is no reason to believe that the crisis will change the way emerging economies look at managing economies that are fast integrating with the rest of the world. However, there are a couple of statements that probably needs empirical evaluation:
Asian currencies are unlikely to lead the way insofar as the Chinese renminbi, against which many Asian currencies are implicitly anchored, remains stable.
It will be interesting to see which of the currencies are implicitly anchored on the CNY. If the article talks about the HKD, a paper by Dong He et. al from the HKMA might be an interesting read. Insofar as other currencies are concerned, I think the DXY index provides a better idea as the CNY is anyway pegged to the US dollar.
On the other hand, leaning against the wind policy of exchange rate management will not only harm the global rebalancing initiative (is there one underway?), but also continue to highlight the credibility of Central Banks of the respective economies regarding inflation and domestic monetary management. In specific, Brazil and Philippines, following an Inflation Target regime (on paper and to a large extent except for exchange rate intervention) will be under severe stress. In short, it might well be the case that short-term goals of export stabilisation will be given greater priority than learning from the current crisis.
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