Asia's currency rollercoaster creates winners and losers

Central bank policies in the US and Japan have buffeted Asian currencies in the past 12 months, sending the Indian rupee down 15 per cent, the yen lower by 10 per cent, and wiping a fifth off the value of the rupiah. But they have also created some unlikely winners and losers across the region, from Mickey Mouse to pickled cabbage.

The widening of South Korea's kimchi deficit - whereby the country imported more of its national dish than it sold abroad - and the growing queues at Japanese theme parks are both manifestations of Abenomics, the pro-growth policies championed by Shinzo Abe, Japan's prime minister, that began with easy money and a devaluation in the yen.

The weaker currency helped fuel a rise in inbound tourism and an increase in Japanese taking "staycations". As a result, last year Disneyland Tokyo posted a record year for both revenue and visitor numbers. Tourist arrivals to Japan topped 10m for the first time in 2013, comfortably trumping the previous record of 8.6m, while outbound trips dropped by 5.5 per cent year-on-year.

The slide in other Asian currencies - prompted by the global "taper tantrum" in May last year that hit many emerging markets - has also given some a surprise boost. The 20 per cent fall in the rupiah and the 9 per cent drop in the baht in the past year has helped Thai and Javanese cattle herders funnel their fresh milk into the cappuccinos of dollar-based Hong Kong and Singapore.

Although fuel bills and wage pressures are pushing up production costs, Thai milk is still about 20 per cent cheaper than the Australian equivalent in Hong Kong, while Indonesian milk is 30 per cent less expensive. Thus both are expanding their market share in the city's fridges and flat whites.

That news will be particularly welcome for the Indonesian authorities, who have been battling to close a damaging current account deficit. Rising exports - predominantly of commodities - are a key part of that effort, and were the main driver of Indonesia's better-than-expected fourth quarter economic performance. Deficit countries were hit hardest in last year's sell-off due to their reliance of external sources of funding.

But the latest round of the currency wars has also created plenty of losers. More tourism has not been enough to ease Japan's growing trade deficit, which stands at a record high this year. With most natural resources priced in dollar, the country has been forced to import ever more expensive fuel to keep the lights on during its nuclear shutdown.

Energy-dependent businesses, such as the famous Japanese bath houses, have felt the chill of rising costs. Data released last month showed that commodity imports have been a major drag on growth, while domestic consumption is failing to pick up the slack.

Then there are the ailing South Korean cabbage patch owners. Japan is Korea's biggest export market for kimchi - the fiery pickled cabbage served with almost every Korean meal. The slide in the yen has sapped Japanese demand for increasingly expensive kimchi, while cheap Chinese imports into Korea are on the rise. South Korea posted a kimchi trade deficit last year of $28m, a sevenfold increase on the previous year's $4m.

The weaker rupiah is also draining plush swimming pools in Jakarta apartment blocks as expats paid in rupiah downsized to smaller, cheaper homes following last year's slide in the local currency. While everyday items are priced in rupiah, many landlords and international schools charge expats in dollars.

In India - another country hit hard by capital outflows last year - local shampoo producers that price their sachets at Rs1 a pop have problems, too. Faced with the rising costs of imported chemicals, some companies are mulling the unattractive option of a 100 per cent price increase.

But for sports fans, the woes of expats and cabbage farmers pale beside those of Australia.

Alessandro Del Piero was lured to the Australian league in part by the soaring Aussie dollar The Italian footbaler, having seen his earnings shrink by about 20 per cent against the euro since signing in the summer of 2012, is likely to play his last game for Sydney in August.

Additional reporting by Nobuko Juji in Tokyo, Song Jung-a in Seoul, Taufan Hidayat and Ben Bland in Jakarta, James Crabtree in Mumbai.

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