Economics

Aug 14, 2026 Jeffrey Frankel

Those who worry that the renminbi, yen, and won are undervalued vis-à-vis the dollar are usually focused on the large trade and current-account surpluses that China, Japan, and Korea run with the US. But coordinated intervention in currency markets will not address the fundamentals underlying these imbalances.

CAMBRIDGE—Major Asian currencies’ exchange rates are again at the center of debates in international monetary economics. With China, Japan, and South Korea all running trade and current-account surpluses, and the United States running corresponding deficits, some argue that the renminbi, yen, and won are undervalued. But given the fundamentals underlying these imbalances, foreign-exchange intervention is unlikely to do much good.