Just as China’s currency continues to fall against the dollar – and wreak havoc in the markets as it does so – most other Asian currencies are also tipped to weaken against the greenback this year. Apart, that is, from the Indian rupee.

Bank of America Merrill Lynch forecasts that onshore renminbi (CNY) will drop to 6.9/dollar by end-2016. Moreover, by December 30 it tips the South Korea won to hit 1,250, the Indonesian rupiah 1,500, the Malaysian ringgit 4.68, the Singapore dollar 1.54, the Thai baht 38.5 and the new Taiwan dollar 35.

The rupee, however, is forecast to appreciate slightly to 65 to the dollar. Accordingly, the best asset class for 2016 will be rupee bonds, with expected returns of 10% this year, said Claudio Piron, co-head of Asia fixed income and FX strategy research at BoA Merrill.

He also expects to see more intra-regional investments, which will mean less foreign-exchange risk, and more use of currency and interest-rate hedges.

Of course it is the RMB that has been garnering the headlines as the year kicks off, with investors concerned about the lack of support for the currency.

Beijing is between a rock and a hard place in this regard. It has pledged to facilitate a market-driven depreciation of its currency and a de-pegging from the dollar, while avoiding competitive devaluation.

But in the first two trading weeks of 2016, the People’s Bank of China has also found itself obliged to combat speculation – bets against the redback are a natural by-product of one-way depreciation of a currency.

The central bank’s moves are having predictably volatile results and are proving costly, noted an FX strategist. China saw its foreign reserves drop by $108 billion in December alone.

“The process of the renminbi depreciating to a reasonable level is painful,” he said. Theoretically the ideal approach should be to allow a quick devaluation, particularly in the case of a country such as China, with its relatively low level of foreign debts and low risk of inflation, noted the strategist. “But we have to admit it’s not easy.”

One reason for avoiding a one-off dramatic RMB devaluation is the potential that it might spark a regional ‘currency war’, with other Asian countries vying to take similar action at the same time.

The key, said Piron, is whether the renminbi can be stabilised by the end of February, when China will host the G20 meetings of finance ministers and central bank governors in Shanghai. If the RMB is under control by then, he said the risk of a currency war would diminish.

That is a big 'if'.

In the meantime, perhaps investors should take a look at Indian bonds.