The Catalysts Driving Asian Forex Down and Boosting Outflows

There are a number of reason Asian currencies have been falling recently, with the most obvious being expectations the Federal Reserve will raise interest rates in the latter part of 2015.

Other factors attributed to weaker Asian currencies include pressure from local businesses, demand for electronics gadgets fell, MERS, funds pulling money from emerging markets, Japanese yen, and a potential Greek default. I'll break down how these are having an effect country-by-country in a moment.

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Currencies and Central Banking

A lot of clueless or dishonest economic writers in the West at times attempt to make a big deal out of how China is "manipulating" their currency by pegging it at a certain level against the U.S. dollar. But the truth is Western nations are doing the same, except they're doing in a stealth mode that the general population doesn't understand.

The best example of that is the United States, Great Britain and the Euro zone, all of whom, via the U.S. Federal Reserve, the Bank of England and the European Central Bank (ECB), employ strategies to manipulate their respective currencies against one another and other currencies to keep the competition from being overly volatile, to the detriment of one currency against another.

That is done simply through inflating the currency, or in other words, through the printing of paper money, or the creating of digital money out of thin air. If one country does it, such as the the United States when the Federal Reserve announced its most recent round of quantitative easing by buying up $40 billion in mortgage-backed securities indefinitely, other countries will do it as well to ensure their currency doesn't become too strong against the U.S. dollar, which would be detrimental to exports in the country or region.

So if one currency gets weaker, the strategic response is to weaken the competing currency in order to order to keep a predictable balance between the currencies.

This is what maddens these dishonest countries concerning China, which is actually much more honest in its currency policy, announcing it right out in the open and pegging it to the up and down movements of the U.S. dollar.

The Japanese, British and nations of the Euro zone do the same thing, only through the mechanism of printing more money, rather than pegging their currencies to the U.S. dollar; the results are the same, but just hidden behind the smokescreen of money creation.

As those in power continue to strive for a one-world government and economic zone, these are the tools used to hide their practical agenda, as few people understand what's really going on and why.

Moves like this continue to strike a dagger into the heart of free markets, as currencies should be allowed to float freely against one another without government and central banking interference. That's where the markets will determine the outcome and response to it, not central planners who believe they can control the economic world.

The point is we must be vigilant and aware of what is happening and why concerning currencies, as they play a major part in any investment decision across a wide spectrum of equities and commodities.

Because central planners always will fail, eventually this will change as one important country or another decides to go their own way in order to protect their own interests. When that happens some of this currency scenario could quickly change. But for now, it appears there are some deals being made behind closed doors to keep some of the volatility out of the currency market.

General Steel Holdings (NYSE:GSI), Gerdau S.A. (NYSE:GGB), Companhia Siderurgica Nacional (NYSE:SID) Rise on Fed Inflation, Collapsing US Dollar

General Steel Holdings (NYSE:GSI), Gerdau S.A. (NYSE:GGB) and Companhia Siderurgica Nacional (NYSE:SID) all moved up with the broader commodity sector Thursday, as the announcement that the Federal Reserve was going to inflate again via its quantitative easing strategy pushed up the price of commodities in anticipation of the inevitable inflation to come.

Commodity prices going up included aluminum, gold, silver and oil . Gold prices soared record levels again, reaching toward the $1,400 an ounce level. Silver exploded past the $26 level, and is ready to continue moving up.

The steel industry could go through a seasons of swings as currencies respond to the fall in value of the U.S. dollar, which will affect margins because of the wide swings in currency value and the battle by some against the Chinese renminbi, which they'll have to take defensive measures against.

Because of market factors, and the overall economic health of the steel industry, it probably won't partake in the surge in commodity prices and demand as other raw materials will surelydo.

General Steel Holdings closed at $39.40 Thursday, rising $0.86, or 2.23 percent. Gerdau S.A. surged to close at $13.55, gaining $0.29, or 2.19 percent. Companhia Siderurgica Nacional was up to $14.59 at the end of the trading session, gaining $0.54, or 3.84 percent.

Citigroup (NYSE:C): Asian Emerging Markets Buying US Dollar

The weak US dollar is wreaking as Citigroup (NYSE:C) notes, Asian countries like Indonesia, Philippines, Taiwan, Thailand, Malaysia and Singapore have been snapping up US dollars as a move against their major competitor China.

Increasing strength of the currencies of the smaller emerging markets has been squeezing margins and profits of companies in the region, as the pegged Chinese currency moves in step with the greenback.

The acquisition of US dollars is a defensive step by these countries in order to maintain competitive exchange rates to compete with their exports.

Although financial media has focused on this recently, it has in fact been going on for quiet some time.

Euro Versus Dollar EUR/USD or Both Versus Gold?

Talk of the performance of the euro versus the dollar EUR/USD increasingly seems irrelevant in light of the misguided practices of governments and central banks around the world, who are addicted to attempting to stimulate their economies through printing money and creating more debt.

In that sense, gold is increasingly being thought of as a currency by those who didn't consider that in the past, and in that regard is considered the strongest in the world by far at this time, probably the major reason it continues to rise.

Currencies around the world are continuing to be debased because of these monetary practices.

So when comparing the U.S. dollar with the euro, it's increasingly becoming irrelevant, as are most currency comparisons. It's more relevant to compare all the currencies with gold. That's more telling and important at this time than the other.

Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), Morgan Stanley (NYSE:MS) Part of New Currency Body

Saying they want to promote a more efficient currency exchange, sixteen giant banks have formed a new organization out of the Association for Financial Markets in Europe, or AFME. Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM) and Morgan Stanley (NYSE:MS) are among those that will be part of the new group, which will be called AFME FX.

AFME said this in a statement, "The AFME FX division will support efforts to promote an efficient global [foreign exchange] market, help develop market best practice, and monitor developments in public policy and regulation that could affect the [currencies] markets."

The 16 banks account for approximately 85 percent of worldwide currency flows in the foreign exchange market.

other major banks to be part of the AFME FX representative body are Deutsche Bank AG (DB), UBS AG (UBS), Barclays Capital (BARC.LN), the Royal Bank of Scotland (RBS), HSBC (HBC) and Credit Suisse (CS).