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Mighty dollar pushes Asian governments to boost currency protection

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Asian governments are increasingly intervening in the market to stem the slide in local currencies that has been driven by the strong US dollar this year.

According to the Nikke Asia report, the relative strength of the US economy and high interest rates, which are likely to remain high for an extended period, have caused Asian currencies to weaken.

Asian policymakers are responding to the dollar’s strength with varying degrees of caution, from verbal warnings to interest rate hikes. Some are even believed to be intervening by buying local currencies from the market. The move is seen as “undermining the credibility of central banks”, says the report.

Analysts will be focusing on the US Consumer Price Index for April, which will be released on Wednesday. Last month’s data caused the Japanese yen to fall sharply against the dollar. The Japanese yen is one of the Asian currencies most affected by the stronger-than-expected US economy.

Intervention continues as yen falls in Japan

Analysts say that although official data has not yet been released, the Japanese government appears to have intervened twice on 29th April and 1st May to support the yen. Prior to the first suspected intervention, the yen had fallen to its lowest level in 34 years, breaching the 160 level against the dollar.

The yen’s decline has been driven by the almost 5 percentage point difference in bond yields between the US and Japan. According to Refinitiv, the Japanese yen is hovering around 155 against the dollar, down 9.4% this year.

According to Mizuho Securities strategist Shoki Omori, further dollar selling and yen buying intervention may be difficult for Tokyo without support from Washington.

The summary of the Bank of Japan’s (BoJ) April policy meeting released last week showed that President Kazuo Ueda struck a “hawkish tone” compared to his previous public statements. While some board members felt that rate hikes could be accelerated, many said that the BoJ should reduce bond purchases.

However, Omori believes that “short” positions against the yen will continue until fundamentals change, as there is “no magic wand” to reverse the yen’s weakness.

South Korea’s central bank ‘burns dollars’

South Korea’s foreign exchange reserves fell by around $6 billion last month from March, partly due to the country’s efforts to halt the fall of the won, according to the Bank of Korea.

The country’s central bank said in a statement that the decline in foreign exchange reserves was related to several factors, including “market stabilisation measures such as currency swaps with the National Pension Service”, which were introduced in September 2022.

According to Moon Da Woon, an economist at Korea Investment & Securities in Seoul, the markets believe that the South Korean government is helping to stem the won’s rapid decline.

South Korea’s finance ministry and central bank verbally intervened in April to warn against rapid currency movements when the won hit the 1,400 level against the US dollar for the first time in almost a year and a half.

Indonesia hikes rates

In Indonesia, the central bank unexpectedly raised its benchmark interest rate by 25 basis points to 6.25% last month in a bid to strengthen the currency.

Bank Indonesia Governor Perry Warjiyo told a press conference last week that data showed no further rate hikes were needed for now and pledged to work to strengthen the currency to below 16,000 per dollar.

The rupiah has strengthened to around 16,000 to the dollar from around 16,300 before the surprise rate hike, but has yet to recover after falling to a four-year low last month.

Indian rupee and Malaysian ringgit also fall

The Indian rupee, one of Asia’s most stable currencies, fell to an all-time low of 83.739 against the dollar last month.

The rupee has been “tightly managed” by the Reserve Bank of India almost since October and has traded in a narrow range around 83, said Rob Carnell, chief Asia-Pacific economist at ING in Singapore.

Carnell said all central and regional banks in Asia, except Malaysia, have foreign exchange reserves to cover more than six months of imports, the threshold for adequate reserves.

The Malaysian ringgit is trading at 4.737 to the dollar, having fallen to a 26-year low of 4.7965 in February.

The ringgit’s weakness is due to the strengthening dollar, a decline in Malaysia’s current account surplus and the currency’s strong correlation with the weakening Chinese yuan.

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Controversial military operations and ethnic dynamics in Pakistan’s fight against terrorism

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In a recent high-level meeting, the federal government of Pakistan announced its intention to launch a new military operation against terrorist organizations. This decision is aimed at eradicating militancy under the banner of Azm-i-Istehkam. Surprisingly, the military leadership has remained silent on this proposed operation, leaving the advocacy to political figures, notably Defense Minister Khawaja Asif of the Pakistan Muslim League (PML-N).

The Pakistan People’s Party (PPP), a significant coalition partner in the federal government, has maintained a conspicuous silence on the matter. Meanwhile, despite the approval from Khyber Pakhtunkhwa’s Chief Minister Ali Amin Gandapur, factions within Pakistan Tehreek-e-Insaf (PTI) and the Sunni Ittehad Council have openly opposed the operation. This divergence in political opinion highlights the complex dynamics at play in Pakistan’s approach to counter-terrorism.

The opposition from various regional and ethnic parties, including the Pashtun Protection Movement (PTM), Pakhtunkhwa Milli Awami Party (PkMAP), and the Awami National Party (ANP), stems from deep-seated concerns about the operation’s focus and its implications. Historically, PTI and PkMAP have not been staunchly anti-Taliban. PTI’s leader, Imran Khan, has consistently opposed military actions against Taliban militants, advocating instead for dialogue. Similarly, PkMAP leader Mehmood Khan Achakzai, while ostensibly opposing terrorism, is perceived to have friendly relations with the Taliban, as evidenced by the relative safety of his party members from Taliban attacks.

Significant religious-political entities have complex stances on militancy in Pakistan

The relative safety of certain political groups, like PTM and the National Democratic Movement, from Taliban violence raises questions. Critics argue that this perceived immunity could suggest covert alliances or understandings, casting doubt on the motivations behind their opposition to the military operation.

Jamiat Ulama-e-Islam (JUI-F) and Jamaat-e-Islami (JI), both significant religious-political entities, have complex stances on militancy. JUI-F’s position has been ambiguous since the Soviet invasion of Afghanistan in 1979. In contrast, JI, having reaped substantial benefits from the Afghan war, now finds itself sidelined and is striving to reassert its relevance by attempting to align with nationalist sentiments.

The media and sections of the government, particularly those influenced by Punjabi and Urdu-speaking elites, have often portrayed the Taliban as predominantly Pashtun. This narrative has led to the proposed military operation being focused on Pashtun-majority areas, such as Khyber Pakhtunkhwa and Balochistan. Defense Minister Khawaja Asif’s statement that the operation will target these regions reinforces this perception.

Pashtun-dominated regions reject the notion that terrorism is a Pashtun phenomenon

However, leaders from Pashtun-dominated regions, like Khan Muhammad Wazir of the ANP, reject the notion that terrorism is a Pashtun phenomenon. Wazir points to the involvement of non-Pashtun militants in numerous terror attacks across Pakistan. He highlights the role of Punjabi militants in groups like the Punjabi Taliban, Lashkar-e-Jhangvi, and Jamaat-ul-Ahrar, who have orchestrated some of the deadliest attacks in recent years. Wazir’s argument underscores the ethnic diversity of militant groups in Pakistan, challenging the stereotype of the Pashtun terrorist.

Wazir’s emotional plea for an operation starting in Punjab, rather than Pashtun areas, aims to shift the focus to the diverse origins of militancy. He names several key figures from Punjab involved in terrorist activities, such as Tariq Lahori of Daesh and Maulana Qasmi of Jamaat-ul-Ahrar. By highlighting these figures, Wazir seeks to demonstrate that terrorism in Pakistan is not confined to any single ethnic group.

Doubt on the narration of the proposed military operation “Azm-i-Istekham”

The insistence on a military operation in Pashtun regions, driven by a media narrative dominated by Punjabi and Urdu-speaking elites, risks alienating the Pashtun community. Wazir’s call for international intervention by entities like China, the United States, Russia, the United Nations, and the Organization of Islamic Cooperation (OIC) underscores the severity of this perceived ethnic targeting. If the government and media continue to frame terrorism as a predominantly Pashtun issue, it may lead to increased ethnic tensions and further marginalize the Pashtun population.

The proposed military operation “Azm-i-Istehkam” and the political dynamics surrounding it reveal deep-seated ethnic and regional tensions within Pakistan. While the operation aims to eradicate terrorism, its focus on Pashtun areas risks reinforcing harmful stereotypes and overlooking the broader ethnic diversity of militant groups. A more equitable approach, recognizing the involvement of non-Pashtun militants and addressing the root causes of militancy across all regions, is crucial for fostering national unity and effectively combating terrorism. Only through such an inclusive strategy can Pakistan hope to achieve lasting peace and stability.

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Huawei Harmony aims to end China’s reliance on Windows and Android

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While Chinese tech giant Huawei’s recent smartphone launches have been closely watched for signs of progress in China’s chip supply chain, the company has also developed expertise in sectors vital to Beijing’s vision of technological self-sufficiency, from operating systems to car software.

Chinese President Xi Jinping told the CPC Politburo last year that China must fight hard to localise operating systems and other technologies “as soon as possible” as the US restricts exports of advanced chips and other components.

OpenHarmony, developed by Huawei, is widely promoted in China as the “national operating system”.

“This strategic move is likely to erode the market share of Western operating systems such as Android and Windows in China as local products gain traction,” Sunny Cheung, an associate fellow at the Jamestown Foundation, a US defence policy group, told Reuters.

In the first quarter of 2024, Huawei’s own version of the HarmonyOS operating system overtook Apple’s iOS to become the second best-selling mobile operating system in China after Android, according to research firm Counterpoint. It has not yet been released on smartphones outside China.

“Harmony has created a strong core operating system for the future of China’s devices,” Richard Yu, president of Huawei’s consumer business group, said at the opening of a developer conference last week.

Self-sufficiency

Huawei first introduced Harmony in August 2019, three months after Washington imposed trade restrictions over alleged security concerns. Huawei denies that its equipment poses a risk.

Since then, China has stepped up its self-sufficiency efforts, pulling out of the main code-sharing centre Github and supporting a local version, Gitee.

China banned the use of Windows on government computers in 2014 and now uses mostly Linux-based operating systems.

Microsoft derives only 1.5 per cent of its revenue from China, its chief executive said this month.

Originally built on an open-source Android system, Huawei this year released the first “pure” version of HarmonyOS, which no longer supports Android-based apps, further separating China’s app ecosystem from the rest of the world.

Huawei said in its 2023 annual report that OpenHarmony was the fastest-growing open source operating system for smart devices last year, with more than 70 organisations contributing to it and more than 460 hardware and software products produced in the financial, education, aerospace and industrial sectors.

Visited by Reuters, Charlie Cheng, deputy director of the Harmony Ecosystem Innovation Centre, said the aim of making it open-source was to replicate Android’s success in eliminating licensing costs for users and provide companies with a customisable springboard for their own products.

“Harmony will definitely become a mainstream operating system and give the world a new choice of operating systems besides iOS and Android,” he said.

Google, Apple and Microsoft did not respond to requests for comment.

China’s previous efforts to build large open source projects have struggled to gain traction among developers, but Huawei’s growing smartphone market share and extra work to develop a broader ecosystem gives Harmony an edge, analysts said.

Huawei’s Yu said this month that more than 900 million devices, including smartphones, watches and car systems, were running HarmonyOS and that 2.4 million developers were coding in the ecosystem.

“OpenHarmony will need more time and iterations for these developers to feel more confident about working with OpenHarmony,” Emma Xu, an analyst at research firm Canalys, told Reuters, adding: “But the reputation, behaviour and trust that HarmonyOS has achieved will certainly have a positive impact.”

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Taliban attends Doha meeting this time

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All set for the 3rd round of UN-initiated Doha conference on Afghanistan situation. The Taliban delegations and representatives from foreign countries will attend the two-day conference in the capital city of Qatar from June 30 and first of July 2024. The Afghan civil society members are also invited. But before we deliver on expectation from this conference, here we take a glance at the second round of Doha conference which was held in February 2024.

Secretary-General Amina J. Mohammed visited Afghanistan in January 2023. The visit had come at a time when the Taliban banned women from going to workplaces and girls from going to schools. Women, working for NGOs and even UN offices, were banned from attending office. Following her trip to Afghanistan at that time, Mohammed went to Kandahar province, the place where the Taliban supreme leader is residing, and met with the senior Taliban officials including Yusuf Wafa, the Taliban provincial governor.

After concluding her trip, Mohammed emphasized the need for a broad political approach in dealing with the Taliban and called on the Taliban to observe women’s rights including their rights to education and work.

In May 2023, the UN decided to arrange a broad-based meeting to discuss Afghanistan. UN Secretary-General Atonio Guterres also traveled to Doha and in a press briefing he called for the formation of an inclusive government and observation of women’s rights in Afghanistan.

The second Doha conference was held on May 1 and 2 and all the discussions were held behind doors. The meeting included envoys from 21 countries including US, Russia, China, Iran, Pakistan, Turkey, Japan, India, Indonesia, UAE, Qatar, Saudi Arabia, UK, France, Germany, Norway and Central Asian states such as Tajikistan, Uzbekistan, Kazakhstan Kyrgyzstan and Turkmenistan.  Representatives from the EU and Organization of Islamic Cooperation (OIC) also participated in the conference. Four members of Afghan civil society were also in attendance, and they called for reopening girl’s schools and formation of such a government which is acceptable for all.

Taliban didn’t accept UN invitation for the second Doha Conference

The UN has said that they didn’t invite the Taliban in the first round of the conference, but they sent an invitation to the Taliban for the second Doha conference, in which the Talian denied their participation.

UN Secretary-General Atonio Guterres said that they didn’t invite the Taliban in the first round of the conference, but they sent an invitation to the Taliban for the second Doha conference.

Guterres said that it was not the right time to meet with the Taliban. Similarly other groups of the Afghan segment including civil society members, women rights activists, and the majority of foreign countries’ representatives were not invited in the first conference.

However, in the second round of talks, foreign representatives held four sessions in the two-day conference, where they discussed human rights issues, including women, and girls’ rights, inclusive governance, counterterrorism, and topics related to drug trafficking.

The aim behind these sessions was to achieve a collective view and develop an international approach regarding Afghanistan, but these meetings, according to Guterres, were not meant for recognition of the Taliban.

Taliban agreed to attend third Doha conference

The Taliban has shown green signal to attend the upcoming third Doha conference. The Taliban delegation has been invited to participate in the Doha meeting, Taliban Foreign Minister, Amir Khan Muttaqi said, adding that Taliban is looking to create a positive relation with the West, including the US, EU, and the regional countries.

Muttaqi said that the Islamic Emirate of Afghanistan has been officially invited and “this invitation is a green signal for the growing possibility of recognition of the Taliban government by the international community”.

“We are seeking positive relations with EU countries, the US and our neighbors and the regional countries,” he added.

Taliban Foreign Minister, Amir Khan Muttaqi said that Islamic Emirate of Afghanistan has been officially invited to Doha Conference, and this invitation is a green signal for the growing possibility of recognition of the Taliban government by the international community. 

Muttaqi’s statement came when the international community still persisted in its demand and expressed concern about the lack of women’s and girl’s access to basic rights including education and participation of them in the political landscape of the country.

The third round of the meeting will be chaired by Rosemary DiCarlo, the United Nations Under-Secretary-General for Political and Peacebuilding Affairs and DiCarlo is a US citizen and has been working in this post since 2018.

DiCarlo has visited Afghanistan two times and her first visit was in December 2021 just four months after US forces withdrawal and the collapse of the Republic System backed by the US in the past 20 years.

During her meeting, she held talks with key Taliban leaders, including Abdul Kabir, the Taliban’s deputy prime minister and she emphasized on the need for continued efforts to create an inclusive system in Afghanistan.

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