U.S. keeps close eye on SE Asia developments<\/p>\n
WASHINGTON (Reuters): The United States is keeping a close
\neye on the financial crisis in Southeast Asia and senior
\nadministration officials said on Thursday they were in constant
\ntouch with authorities throughout the region.<\/p>\n
A 10.41 percent plunge in Hong Kong stocks, which sent
\nshockwaves through global financial markets, is the latest in a
\nseries of Asian financial crises worrying U.S. policymakers.<\/p>\n
"We obviously have been focused on financial issues in
\nSoutheast Asia for many, many months now and we remain focused on
\nthose issues," U.S. Treasury Secretary Robert Rubin said after
\ngiving a speech at the U.S. Chamber of Commerce.<\/p>\n
"We have been in touch with the relevant authorities in
\nvarious countries, and financial institutions, and will remain
\nso," he told reporters.<\/p>\n
The Dow Jones industrial average index of key U.S. stocks
\nended the day down 186.88 points, or 2.33 percent, at 7,847.77
\npoints. U.S. bonds gained from the turmoil as international
\ninvestors sought a safe haven for their money. The benchmark 30-
\nyear Treasury bond was up almost a point and a half at 100-27\/32
\nto yield 6.31 percent in late trading.<\/p>\n
The worst-ever point-drop in Hong Kong stocks also sent
\nwarning bells ringing at the U.S. Federal Reserve.<\/p>\n
"We have no comment, except to say that we are monitoring it,"
\nspokesman Joseph Coyne told Reuters in a rare statement. Fed
\nofficials usually try to avoid references to daily moves in
\nfinancial markets for fear of unsettling investors.<\/p>\n
Analysts said the Asian crisis may make the Fed a bit more
\nhesitant to boost U.S. interest rates. They said cheaper Asian
\ncurrencies could reduce U.S. import prices, thus keeping a lid on
\ninflation. A weakening of the economies of America's key trading
\npartners also could slow down the economic expansion in the
\nUnited States, reducing the chances of overheating.<\/p>\n
International financial institutions leapt to the defense of
\nthe Hong Kong authorities, stressing the strength of the economy
\nand its ability to fight off speculative attacks.<\/p>\n
"The IMF has confidence that the Hong Kong authorities will be
\nable to withstand the assault from speculators," an official at
\nthe International Monetary Fund (IMF) said. "They are tough and
\nsophisticated and they know what to do to stand the course."<\/p>\n
U.S. administration officials seized the opportunity of Hong
\nKong's financial woes to reiterate their gospel that only sound
\nmacroeconomic policies can ensure sustained economic growth and
\nstable financial markets.<\/p>\n
"Over time, markets follow fundamentals and the key, for all
\nsorts of reasons, is to get fundamentals right," Rubin said.<\/p>\n
The Treasury chief has repeatedly lobbied governments in
\nSoutheast Asia to strengthen their financial systems, open
\nthemselves to world markets and improve regulatory oversight to
\nhelp prevent financial turmoil.<\/p>\n
Asked about the possible impact of Asia's troubles on the U.S.
\nstock market, the Treasury chief replied: "I think the key for us
\nis to do exactly what we have been doing for the last five years,
\nto focus on the fundamentals."<\/p>\n
"As long as we get our fundamentals right, the United States
\nwill be just fine," he added. Rubin declined to comment directly
\non the level of U.S. stocks.<\/p>\n
A spokesman for President Bill Clinton added the United States
\nwas satisfied with international efforts, triggered by the Mexico
\nfinancial crisis of 1994-95, that had led to an adequate
\ninternational financial surveillance system.<\/p>\n
The turmoil in Hong Kong is the latest economic setback for
\nthe Southeast Asian region. The collapse of the Thai baht in July
\ntriggered currency devaluations in several countries, and three
\n-- Thailand, the Philippines and Indonesia -- were forced to seek
\nIMF support.<\/p>",
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