China's impact on local currencies likely to come from growth

The impact that China will have on local currencies is more likely to come from China's economic growth rather than from its currency. For those currencies that are particularly closely tied into global value chains that run through China it will be Chinese exports that are most important. 

If a weaker CNY boosts these currencies, it would be helpful, among this group of  economies are Taiwan, Korea and Japan - though a large boost is unlikely, says Societe Generale. For economies that provide raw materials to China, domestic growth will play a greater role, and they are likely on balance to suffer from the weaker CNY.

Among this group are Australia, Indonesia and Malaysia. At the same time, potential capital flight as US interest rates rise pose downside risks to local currencies, and more so than in China where capital flows still face some restrictions.