ASEAN states may revive currency stabilization scheme<\/p>\n
PHUKET, Thailand (Reuter): Southeast Asian finance ministry
\nofficials yesterday discussed the possibility of reviving a
\ndormant scheme to stabilize regional currencies tied to the
\nbullish dollar.<\/p>\n
Thai Finance Ministry permanent secretary Chatumongkol Sonakul
\nsaid the Association of Southeast Asian Nations (ASEAN) was
\nconsidering reviving the now inactive US$200 million ASEAN Swap
\nArrangement first set up by the regional grouping in 1977.<\/p>\n
The senior officials were meeting on this resort island one
\nday ahead of the first one-day ASEAN finance ministers'
\nconference Saturday, which will look at reactivating the dormant
\nswap arrangement.<\/p>\n
ASEAN groups Brunei, Malaysia, Indonesia, the Philippines,
\nSingapore, Thailand and Vietnam.<\/p>\n
IMF Managing Director Michel Camdessus is due to give a
\nkeynote speech on the global economic outlook and regional
\ncooperation here on Saturday.<\/p>\n
The currencies of some ASEAN member countries such as Thailand
\n-- whose baht is pegged to a basket of currencies dominated by
\nthe dollar -- have been under severe pressure during the dollar's
\nrecent bull run.<\/p>\n
The Thai baht has come under sporadic but strong selling
\npressure since early this year by speculators concerned that
\nThailand may be forced to devalue its currency later this year.
\nThe Thai baht is tied 82 percent to the surging U.S. dollar.<\/p>\n
Chanchai Musinisakorn, a Thai finance ministry economist, said
\nthe officials did not reach a decision on whether or when to
\nrevive the currency-stabilizing arrangement, but agreed its size
\nneeded to be expanded if it was to be effective.<\/p>\n
Any decision to revive the ASEAN instrument would depend on
\nthe extent to which its members could tap alternative emergency
\nfunds from the International Monetary Fund's New Arrangements to
\nBorrow (NAB), the officials said.<\/p>\n
The IMF executive board in January approved the NAB, a $48
\nbillion line of credit to be used in situations that could
\nthreaten the stability of the world monetary system.<\/p>\n
\"ASEAN countries have seen volatile regional capital flows.
\nOur cooperative measures will probably link to IMF's NAB but that
\ndoes not mean to say that ASEAN members are facing problems,\"
\nanother Thai official said.<\/p>\n
Malaysian and Philippine officials added that currency
\nstability would be one of the macroeconomic issues on the agenda
\nfor discussion by the ministers.<\/p>",
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