Currencies: Devaluation – where next?

Following recent devaluations in the Philippines peso, Thai baht, Czech koruna and, latest, the Indonesian rupiah, international bond investors are asking themselves, where next? A report by Deutsche Morgan Grenfell points to the mounting pressure on such currencies as the Malaysian ringgit, Brazilian real and Greek drachma.

DMG chief economist Steven Bell says the explosive growth in international capital market flows at a time when many countries are attempting to fix their exchange rates has led to a situation where more exchange rate declines are likely to be forced on reluctant governments.