http://thewillnigeria.com/news/wp-content/uploads/2015/04/DOLLAR-NAIRA-2.pngThe reverberations from China’s decision to let the yuan weaken and the slide in the Russian ruble forced two emerging-market central banks to devalue their currencies in a single day, fueling speculation who might be next.

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The main zones of vulnerability to the depreciations in China and Russia are the countries of Asia and those with ties to the former Soviet Union, many of them commodity exporters. While Azerbaijan and Georgia have devalued their exchange rates over the past year, others including Armenia, Tajikistan, Moldova, Mongolia and Nigeria remain at risk.

Earlied in the week Kazakhstan allowed the tenge to drop the most since a depreciation 18 months ago and Vietnam marked down the dong for the third time this year after the yuan’s decline last week made their exports less competitive. China’s surprise devaluation mounted pressure on currencies already reeling under prospects for higher U.S. interest rates and tumbling commodity prices.

“The pressure to adjust through further devaluation is increasing, especially for those who are commodity exporters and those linked by trade with countries like Russia, where the ruble has weakened a lot,” Ilan Solot, an emerging-market currency strategist at Brown Brothers Harriman, said by phone from London on Wednesday. “By contrast, places such as Brazil, Mexico or Malaysia are starting to resist further depreciation.”

Countries with managed exchange rates, such as Kazakhstan and Nigeria, have found defending their currencies increasingly difficult as they deplete their foreign-exchange reserves. The devaluations relieve the pressure by aligning the rates closer to market forces.

‘Credibility Hurt’

Still, one-time adjustments in currency rates don’t come without costs.

“The risk for these countries is that devaluations drive inflation and external indebtedness while hurting domestic consumption and overall credibility,” Solot said. “Would you want to invest in a country if you know it may devalue?”

The tenge retreated 4.5 percent to 197.28 per dollar by 5:10 p.m. in Almaty. That was the steepest retreat since the central bank, which uses its foreign-currency reserves to manage the exchange rate within a band, let it drop about 20 percent in February 2014.

Kazakhstan would need to depreciate the tenge even more to sustain its exports, according to HSBC Holdings Plc. The tenge has dropped 7.7 against the dollar in the past 12 months, compared with a 46 percent depreciation in the ruble.

“The intensification of global headwinds makes a tenge devaluation more urgent and increases the probability of further moves this year,” Alexander Morozov and Artem Biryukov, the bank’s Moscow-based economists, wrote in a note.

Fed Angle

In Vietnam, where Prime Minister Nguyen Tan Dung is seeking to safeguard export growth, the central bank weakened its reference rate by 1 percent and increased the scope for fluctuations to 3 percent on either side.

“Authorities in Vietnam are to a certain extent playing a game of catch-up,” Gareth Leather, an economist at Capital Economics Ltd. in London, wrote in a note. “Even after today’s devaluation, the dong has fallen by less against the renminbi over the past year than other currencies in the region.”

The Malaysian ringgit, Indonesian rupiah and South Korean won have weakened at least 10 percent against the yuan in the past 12 months, compared with a depreciation of about 1.5 percent for the dong, according to data compiled by Bloomberg.

Multiple Factors

Central banks from Asia “are clearly concerned about capital outflows,” said Mitul Kotecha, head of Asia-Pacific foreign-exchange strategy at Barclays Plc in Singapore. “China’s move, the imminence of the Fed move, lower commodity prices — none of these factors are helpful.”

Nigeria may be the next country to devalue its currency, according to Mark Cudmore, a London-based strategist at Bloomberg. After the nation imposed trading restrictions in February to prevent a drain of dollars, importers have been unable to pay suppliers, while a black market thrives in foreign banknotes.

“They are suffering,” Cudmore said by e-mail on Wednesday. “They will surely have to devalue” later this year, he said.

Weakness in emerging-market currencies showed no let-up on Wednesday as investors awaited the minutes of the Federal Reserve’s latest policy meeting for clues on the timing of a rate increase. The Turkish lira slid 1.3 percent, dragging a gauge of 20 developing-nation currencies to an all-time low. Mongolia’s tugrik also fell to a record as a slump in commodity prices weighed on the mineral-rich nation, which borders both Russia and China.

“Any hawkish surprise should add to pressure on emerging-market currencies, particularly amid concerns over China’s growth outlook,” Morgan Stanley strategists including James Lord in London said in a report.