China Toys With Asian Markets

NEW YORK: The Brazil currency crisis might just go away, if China would only let it. Markets slid across Asia on fresh currency uncertainties Monday after a report in Sunday's official China Daily Business Weekly, which, while mostly containing assurances that China would not devalue its currency, the yuan, slyly let slip near the end that maybe it wasn't such a bad idea after all. That, of course, isn't how Asia feels about it. A Chinese devaluation would immediately throw the fragile Asian-crisis economies into turmoil -- and by extension cast more doubts on Brazil -- and the rumor pushed down markets in Indonesia, Singapore, Taiwan, Hong Kong and Seoul.

TIME senior economics reporter Bernard Baumohl still considers the possibility of a yuan devaluation remote. "The main reason is because China doesn't need to do it -- its economy is still strong," he says. "Also, they're enjoying a position of respect in the economic world because they haven't given in to a devaluation yet." But China seems to enjoy flexing its muscles every once in a while, making the U.S. and the IMF flinch a little by reminding them how easily it can nudge Asia back into the abyss. With the U.S. economy still seemingly immune to global shock waves, Wall Street may opt to shrug off the renewed fears. But then again, that's why they call it uncertainty.