Prime Minister Abhisit Vejjajiva, fearful of the effects of the soaring baht due to massive capital inflows, has proposed the use of the Chinese yuan as a major regional trading currency.Abhisit calls on Asia to use yuan in trade
G20 makes no progress in curbing capital flows
13/11/2010
Prime Minister Abhisit Vejjajiva, fearful of the effects of the soaring baht due to massive capital inflows, has proposed the use of the Chinese yuan as a major regional trading currency.
Asia-Pacific leaders will have to discuss measures to deal with the fund inflows after the Group of 20 major economies failed to reach any tangible decisions, Mr Abhisit said yesterday.
"The G20 did not make any progress on the matter and it is difficult to get the United States and China to express their clear stances on the issue. But what we can do is try to cooperate in the region and reduce the impact from currency volatility," Mr Abhisit said before leaving for the Asian Games in China and an Asia-Pacific Economic Cooperation (Apec) leaders' meeting in Yokohama, Japan, this weekend.
G20 leaders drew a veil over their economic policy disputes in South Korea yesterday. They agreed to tackle tensions that have raised the spectre of a currency war and trade protectionism, but they fell short of already low expectations.
Only vague "indicative guidelines" were set for measuring imbalances between their multi-speed economies. Leaders called a timeout to let tempers cool and left details to be discussed in the first half of next year.
Mr Abhisit echoed a call made by the Asian Development Bank (ADB) to use China's yuan as a major trading currency in the region to reduce the impact of currency volatility, especially linked to the weakening of the US dollar. He said he was the one who proposed the idea to the ADB.
ADB president Haruhiko Kuroda met Mr Abhisit this week to seek Thailand's support when it tables the proposal at the next meeting of Asean+3 (Asean plus China, Japan and South Korea) finance ministers.
The prime minister expects the currency issue to be raised at the Apec meeting. "What Apec must push for are ways to promote regional cooperation so that the region can cushion the impacts of the fluctuations of currencies," Mr Abhisit said.
He added, however, that for the Chinese yuan to have a greater role in transactions in the region, China would have to relax its tight controls on the currency and its capital account.
At present, about 90% of trade in Asia is conducted in US dollars.
"I suggested that Asean could have an office dedicated to the handling of currency issues. It could join forces with the ADB in pushing the idea forward," Mr Abhisit said.
Experts expect currency issues to be highlighted at the Apec meeting.
Donald Tsang, chief executive of the Hong Kong Special Administrative Region, said the regional private sector should brace for high volatility in the currency and securities markets as economies were increasingly linked.
He made the comments in a sideline forum of the Apec meeting that started yesterday.
The most pronounced problem to result from capital inflows, stemming from US funds seeking returns in Asia, would be an unsustainable rise in asset prices, Mr Tsang said.
"The imbalance is unique. I have never seen it in my working life," he said.
G20 makes no progress in curbing capital flows
13/11/2010
Prime Minister Abhisit Vejjajiva, fearful of the effects of the soaring baht due to massive capital inflows, has proposed the use of the Chinese yuan as a major regional trading currency.
Asia-Pacific leaders will have to discuss measures to deal with the fund inflows after the Group of 20 major economies failed to reach any tangible decisions, Mr Abhisit said yesterday.
"The G20 did not make any progress on the matter and it is difficult to get the United States and China to express their clear stances on the issue. But what we can do is try to cooperate in the region and reduce the impact from currency volatility," Mr Abhisit said before leaving for the Asian Games in China and an Asia-Pacific Economic Cooperation (Apec) leaders' meeting in Yokohama, Japan, this weekend.
G20 leaders drew a veil over their economic policy disputes in South Korea yesterday. They agreed to tackle tensions that have raised the spectre of a currency war and trade protectionism, but they fell short of already low expectations.
Only vague "indicative guidelines" were set for measuring imbalances between their multi-speed economies. Leaders called a timeout to let tempers cool and left details to be discussed in the first half of next year.
Mr Abhisit echoed a call made by the Asian Development Bank (ADB) to use China's yuan as a major trading currency in the region to reduce the impact of currency volatility, especially linked to the weakening of the US dollar. He said he was the one who proposed the idea to the ADB.
ADB president Haruhiko Kuroda met Mr Abhisit this week to seek Thailand's support when it tables the proposal at the next meeting of Asean+3 (Asean plus China, Japan and South Korea) finance ministers.
The prime minister expects the currency issue to be raised at the Apec meeting. "What Apec must push for are ways to promote regional cooperation so that the region can cushion the impacts of the fluctuations of currencies," Mr Abhisit said.
He added, however, that for the Chinese yuan to have a greater role in transactions in the region, China would have to relax its tight controls on the currency and its capital account.
At present, about 90% of trade in Asia is conducted in US dollars.
"I suggested that Asean could have an office dedicated to the handling of currency issues. It could join forces with the ADB in pushing the idea forward," Mr Abhisit said.
Experts expect currency issues to be highlighted at the Apec meeting.
Donald Tsang, chief executive of the Hong Kong Special Administrative Region, said the regional private sector should brace for high volatility in the currency and securities markets as economies were increasingly linked.
He made the comments in a sideline forum of the Apec meeting that started yesterday.
The most pronounced problem to result from capital inflows, stemming from US funds seeking returns in Asia, would be an unsustainable rise in asset prices, Mr Tsang said.
"The imbalance is unique. I have never seen it in my working life," he said.
