Asian currency turmoil to settle soon: BOJ<\/p>\n
TOKYO (Reuter): Bank of Japan (BOJ) Executive Director Takeshi
\nAnzai said on Wednesday that he sees Asian currency turmoil
\nsettling down soon.<\/p>\n
He said Asian currencies should reflect economic fundamentals.<\/p>\n
Asked about the outlook for the Thai economy, Anzai told
\nReuters Financial Television: \"The economy of Thailand may slow
\ndown temporarily after the country's decision to float the baht
\non July 2.\"<\/p>\n
He added that the BOJ supported Thailand's measures to rein in
\nits domestic inflation.<\/p>\n
Anzai said that he does not see foreign exchange volatility
\ncasting a shadow over growth in Asia, adding that the authorities
\nin Asia must make clear their views to prevent the markets from
\novershooting.<\/p>\n
\"There might be a one-off slowdown in this process of
\nadjustment. That's unavoidable, but it's also a good thing. This
\nis not a crisis,\" Anzai said.<\/p>\n
Asked about the usefulness of so-called repo pacts in the
\ncontext of recent volatility in Asian currencies, Anzai said that
\nthey had not been needed since the situation had not resulted in
\na lack of liquidity.<\/p>\n
That alone demonstrates that the recent situation is not a
\ncrisis, he said.<\/p>\n
In April of 1996, Japan agreed with the monetary authorities
\nof Australia, Hong Kong, Indonesia, Malaysia, the Philippines,
\nSingapore and Thailand to establish bilateral repo or repurchase
\nagreements to provide liquidity in times of currency crises.<\/p>\n
South Korea joined the pact in January this year.<\/p>\n
The repo pact gives participants instant access to cash by
\nselling their holdings of U.S. government securities to the
\npact's partners with a promise to buy them back later.<\/p>\n
Anzai said the recent developments in Thailand and the
\nPhilippines have given policy makers more flexibility to
\nconcentrate on domestic fundamentals.<\/p>\n
Malaysia and Indonesia have already been pursuing \"a
\nrelatively more flexible\" foreign exchange policy and Anzai said
\nhe understood that authorities would continue that.<\/p>",
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