According to Jinshi, after Indonesia unexpectedly raised interest rates to defend the rupiah, Asia's efforts to block the strong dollar seem to be escalating. The currencies of Japan, South Korea, Thailand, Malaysia, the Philippines and India are currently fluctuating near multi-year lows, which increases the possibility of monetary authorities taking more forceful actions to prevent the depreciation of their currencies.

Indonesia's unexpected tightening of monetary policy this week highlights the tricky position that Asian central banks are in as they grapple with the prospect of "higher and longer" U.S. interest rates. Faced with curbing economic growth and defending their falling currencies, Asian policymakers must make a choice. "Bank Indonesia's unexpected rate hike will certainly make other emerging market central bank governors nervous," said Frederic Neumann, chief Asia economist at HSBC.