Assessing the damage: Uncertain times in the currency markets

Since July, when the Philippines devalued its currency, Asian currencies have endured a brutal pounding, exacerbated by the Hong Kong stock-market bloodbath of October 28 and mounting evidence of Japan’s banking-sector problems. Fearful of the risk of contagion, investors have been retreating from such places as Russia and Brazil where risks are particularly apparent. This has put stiff pressure on these countries’ currencies.

“We’re entering a risk-aversion phase with the focus on safety,” says Avinash Persaud, chief currency strategist at JP Morgan in London.