Some of the core Asian economies including China, Thailand and Malaysia are believed to be possessing undervalued currencies relative to the fundamentals economic variables of these economies. Concerning the current devaluation of currencies, International Monetary Fund (IMF), an international monetary organization has suggested these countries to strictly focus on their fiscal policy to support the economic growth. In one report, IMF has revealed that the gains in currencies of nations with external trade surpluses have halted over the period of past 8 months. This is presumed to be the main cause behind deflated value of currencies and considering the situation, analysts are suggesting the government of these economies to come up with supportive fiscal measures, i.e., correct currency valuation.

Despite strong current accounts, countries in Asian region like China, Malaysia, Singapore and South Korea are having weaker currencies than it would actually be with more appropriate and enviable set of fiscal and monetary policies. With the rate of inflation constantly falling in these economies, the credit expansion, via reduced rate of interest, has resulted in booming property prices. “Measuring the intrinsic value of currencies of these economies with their economic fundamentals is not giving true worth of their currencies,” opine economists from Asian region. IMF in a statement said, “Considering this credit and exchange rate picture, these countries should wait and see or consider modest further easing of monetary policy stances and rely mainly on fiscal policy to support demand.”