Seoul/Tokyo. A year after US President Donald Trump took office, heightened rhetoric out of Washington about unfair trade has kept Asian policymakers reluctant to openly talk down their currencies despite the dollar's slump to multi-year lows.
Instead, central banks are looking at subtler ways to rein in their currencies as sustained weakness in the dollar erodes the competitiveness of many exporting nations.
Thailand's central bank, for example, said last week it was relaxing rules to allow retail investors to directly buy foreign securities. That seemed aimed at encouraging capital outflows to cap the baht, which is at four-year highs.
While firm demand for Asian exports is seen as creating legitimate support for regional currencies, something central banks tacitly accept, analysts say Trump's aggressive posture on trade has redrawn the battle lines in foreign exchange markets.
"US President Donald Trump carries the bigger stick: the threat of protectionism," writes Joachim Fels, global economic adviser at bond fund PIMCO. "And so Europe and Japan have acquiesced; neither has stemmed their currencies' appreciation with words or actions."
Recent trade barbs include the US administration's proposals to impose tariffs on steel imports, Korean washing machines and Chinese solar panels.
They come alongside the dollar's steady depreciation since the beginning of 2017, although it has ticked up since late last week after the fastest US employment growth in 8-1/2 years fanned expectations of more aggressive policy tightening by the Federal Reserve and caused global equities to sell off.
A key moment in the dollar's long run lower was US Treasury Secretary Steve Mnuchin's comments in late January that America prefers a weak currency.
For its part, US Treasury says its semi-annual reports that identify what it sees as currency manipulating governments have been effective in boosting investment and stabilizing foreign exchange.
"The ultimate goal is for the world financial system to be stable and growth to accelerate. We're pleased with the results that are underway," US Treasury Undersecretary for International Affairs David Malpass told Reuters last week.
"We've seen a pickup both in the US and in global growth, in part because the financial system has been stable."
While many Asian central banks have been intervening in currency markets as the dollar declined, they have also been quick to affirm their reasons were not based on trade-competitiveness.
Bank of Thailand assistant governor Chantavarn Sucharitakul told Reuters it was natural for the baht to appreciate, given the country's massive current account surplus, but the movements should not be too abrupt and "the exchange rate of small open economies cannot be left to benign neglect."
A senior Japanese government official told Reuters its "stance is to avoid competitive devaluation as agreed by G7 and G20. There's no change to this."
This contrasts with explicit threats from Japanese Finance Minister Taro Aso in May 2016 that the government would intervene if "one-sided" moves in the yen hurt the economy.
China's central bank last month tweaked its currency policy to better align the yuan with exchange rates of its trading partners and reduce its correlation with the dollar. Its policymakers have publicly vowed not to get too much in the way of market forces.
But while the new trade landscape has made Asian policymakers more cautious in their words and actions, many of the region's exporters have been more explicit about the pain of a stronger currency.
South Korean companies, including major auto and electronics manufactures, have lamented the won's surge against both the dollar and the yen in 2017.
SK Hynix, the world’s second-largest memory chip maker, had record earnings in 2017 but foreign exchange-related losses comprised the bulk of its non-operating expenses. Apple supplier LG Display is bracing for exchange rates to be a negative factor for the company this year.
Car maker Hyundai Motor Co., already grappling with falling prices and stiff competition in the international market for sedans had its worst earnings in seven years in 2017. The won's 12.8 percent rise against the dollar wiped out a substantial chunk of those meager profits.
"Please let me know if there are good ways to minimize the currency impact," a Hyundai Motor Group source said to Reuters. "We are having a tough time."