ASEAN to discuss weak U.S. dollar

ASEAN to discuss weak U.S. dollar

Yeoh En-Lai, Associated Press, Singapore

With their economies still smarting from the last Asian economic crisis, Southeast Asian finance ministers are expected to meet Wednesday to discuss the dangers of the softening U.S. dollar, America's towering budget deficit and plans to form a European Union-style economic community.

Finance ministers from the 10-member Association of Southeast Asian Nations will gather in Singapore where the dark clouds coming from the U.S. are likely to be on the agenda, economists say.

They met behind closed doors with Chinese, Japanese, South Korean officials here on Tuesday.

Singapore's Deputy Prime Minister Tony Tan warned in January that Washington's "unprecedented" budget deficit spending could have negative repercussions in Asian countries that depend heavily on exports to the United States. Several Asian central banks, including Japan and Singapore, have intervened to prop up the U.S. dollar.

Asian finance ministers are likely to discuss measures to slow down the U.S. dollar's decline as they strive to protect their economic growth, which is still recovering from a financial crisis that swept the region in 1997, economists and officials said.

"One can expect the U.S. dollar's effect on Asia to be discussed behind closed doors," Standard Chartered's chief regional economist Joseph Tan said.

The U.S. dollar has fallen 5 percent against the Singapore dollar since September 2003. It also recently reached a record low against the euro and an 11-year low against the pound.

"For export-oriented countries, there's not much else they can do except intervene to stop the decline. The dollar will warrant some kind of statement at the meeting," GK Goh Securities regional economist Song Seng Wun said.

Asia's export-focused economies are already suffering from the U.S. dollar's steady decline. A weak dollar makes exports more expensive and slows growth in a region where economies have already been severely battered by the war in Iraq, SARS and bird flu in the past year.

Officials are also expected to discuss proposals from last October's ASEAN summit in Bali where leaders agreed to push forward on an Europe-like economic community by 2020.

The official agenda will focus on ASEAN's capital markets progress, liberalization of its capital accounts and financial services, and possible cooperation on a single currency.