28 October 2010
Asian leaders urge cooperation to ease currency woes
ASEAN leaders join hands for a group shot at the opening ceremony of the 17th ASEAN Summit
HANOI : Southeast Asian leaders, faced with rocketing exchange rates that risk destabilising their economies, on Thursday called for more cooperation between regional central banks to calm the currency tensions.
While China has kept a tight grip on the yuan, many Asian nations have seen their currencies soar against the US dollar, making their exports less competitive and inviting a massive inflow of foreign capital.
The leaders of Thailand and the Philippines believe stronger coordination would give the 10-member Association of Southeast Asian Nations (ASEAN) more clout as China and the United States trade blows.
"It's important for us to be more coordinated and speak with one voice, particularly with regard to things like currency," said a spokesman for Philippine President Benigno Aquino on the sidelines of the ASEAN summit.
Currency tensions are a hot issue at the meeting of the 10-member Association of Southeast Asian Nations, and wider 16-nation talks on Saturday that include China, Japan, South Korea, Australia, India and New Zealand.
Host Vietnam is something of an anomaly as its non-convertible dong currency is under pressure amid spiralling inflation.
Aquino and Thailand's Prime Minister Abhisit Vejjajiva discussed their concerns on rising exchange rates at two-way talks on Thursday, said spokesman Ricky Carandang.
"The agreement (with Abhisit) was that central bankers and finance ministers talk a little bit more frequently because right now the actions have been taken on an individual rather than a coordinated basis," he said.
"So we feel that if we talk to each other more and perhaps coordinate our efforts more, then they would be more effective."
Washington has long accused China of keeping the yuan artificially low.
Beijing in turn says the Federal Reserve's loose monetary policy risks undermining emerging economies, now grappling with an influx of hot money as investors seek higher returns due to low interest rates in the US and Europe.
Capital inflows push Asian currencies higher still and have led to steep gains in stocks and property prices, fuelling fears of inflation and speculative bubbles that could burst if the money exits in haste.
Thailand has already moved to stem capital inflows after a 10 per cent jump in the value of the baht over the past year, slapping a tax on foreigners investing in bonds.
ASEAN countries realise they have limited tools at their disposal to influence a currency drama that is being played out by the world's largest economies, but in which they are some of the biggest victims.
Boosting regional demand - and reducing reliance on US and European markets - could be a way to keep ASEAN economies stable, said the bloc's secretary-general Surin Pitsuwan.
The leaders "expressed concern" about "a lack of progress and dynamism in traditional Western markets," he told reporters after the first session of talks, which were continuing over dinner.
"That is why we have to commit ourselves more actively in creating our own market, our own purchasing power," he added.
Credit Suisse said in a currency report this week that "Asian exporters should be worrying much less about the strength of their currencies and much more about the prospects for world trade growth".
Asian leaders urge cooperation to ease currency woes
ASEAN leaders join hands for a group shot at the opening ceremony of the 17th ASEAN Summit
HANOI : Southeast Asian leaders, faced with rocketing exchange rates that risk destabilising their economies, on Thursday called for more cooperation between regional central banks to calm the currency tensions.
While China has kept a tight grip on the yuan, many Asian nations have seen their currencies soar against the US dollar, making their exports less competitive and inviting a massive inflow of foreign capital.
The leaders of Thailand and the Philippines believe stronger coordination would give the 10-member Association of Southeast Asian Nations (ASEAN) more clout as China and the United States trade blows.
"It's important for us to be more coordinated and speak with one voice, particularly with regard to things like currency," said a spokesman for Philippine President Benigno Aquino on the sidelines of the ASEAN summit.
Currency tensions are a hot issue at the meeting of the 10-member Association of Southeast Asian Nations, and wider 16-nation talks on Saturday that include China, Japan, South Korea, Australia, India and New Zealand.
Host Vietnam is something of an anomaly as its non-convertible dong currency is under pressure amid spiralling inflation.
Aquino and Thailand's Prime Minister Abhisit Vejjajiva discussed their concerns on rising exchange rates at two-way talks on Thursday, said spokesman Ricky Carandang.
"The agreement (with Abhisit) was that central bankers and finance ministers talk a little bit more frequently because right now the actions have been taken on an individual rather than a coordinated basis," he said.
"So we feel that if we talk to each other more and perhaps coordinate our efforts more, then they would be more effective."
Washington has long accused China of keeping the yuan artificially low.
Beijing in turn says the Federal Reserve's loose monetary policy risks undermining emerging economies, now grappling with an influx of hot money as investors seek higher returns due to low interest rates in the US and Europe.
Capital inflows push Asian currencies higher still and have led to steep gains in stocks and property prices, fuelling fears of inflation and speculative bubbles that could burst if the money exits in haste.
Thailand has already moved to stem capital inflows after a 10 per cent jump in the value of the baht over the past year, slapping a tax on foreigners investing in bonds.
ASEAN countries realise they have limited tools at their disposal to influence a currency drama that is being played out by the world's largest economies, but in which they are some of the biggest victims.
Boosting regional demand - and reducing reliance on US and European markets - could be a way to keep ASEAN economies stable, said the bloc's secretary-general Surin Pitsuwan.
The leaders "expressed concern" about "a lack of progress and dynamism in traditional Western markets," he told reporters after the first session of talks, which were continuing over dinner.
"That is why we have to commit ourselves more actively in creating our own market, our own purchasing power," he added.
Credit Suisse said in a currency report this week that "Asian exporters should be worrying much less about the strength of their currencies and much more about the prospects for world trade growth".
AFP
