Central banks in Emerging Asia appear sanguine over recent currency weakness

Indeed, while central banks meeting this week in Korea and the Philippines, rates unchanged took note of the PBoC's FX changes and the resulting market volatility, they suggested comfort with current policy stances. 

"In Korea, the governor and the statement indicated that growth momentum has bottomed and activity levels are expected to rise gradually back to trend in H2. Helped by past stimulus, both consumer and producer sentiment indicators are judged to have improved, although exports have remained sluggish", says Barclays. 

The unanimous decision was also an indication that MPC members feel the burden of stimulus should now fall on fiscal expansion and the need to observe the effects of increased currency volatility after China's devaluation. In any case, with the KRW weakening sharply in recent weeks, the urgency to deliver more monetary easing has subsided, in the interests of limiting capital volatility. 

"In the Philippines, while persistent low inflation has led us to push back our rate hike call from Q4 15 to Q3 16, the BSP continued to signal little appetite for any easing in monetary policy, with Deputy Governor Guinigundo noting that there was no need for any 'additional monetary support'", added Barclays.