ASEAN to intensify concerted action on currency instability
ASEAN to intensify concerted action on currency instability
KUALA LUMPUR (Agencies): ASEAN members agreed yesterday to
intensify their cooperation in a bid to stabilise regional
foreign exchange rates following recent plunges in Southeast
Asian currency values.
"Foreign ministers expressed serious concern over well-
coordinated efforts to destabilize ASEAN currencies for self-
serving purposes, thus threatening the stability of all ASEAN
economies," a joint statement said.
"They called for further intensification of ASEAN's
cooperation to safeguard and promote ASEAN's interests in this
regard," said the statement, issued at the end of the annual
meeting of the group's foreign ministers.
ASEAN ministers included the phrase on "international currency
manipulation" as a last-minute insertion into the statement,
officials said.
The statement coincided with an accord in Shanghai yesterday
to extend existing currency swap arrangements between five ASEAN
central banks, which met in Shanghai together with their
counterparts from other Asian and Pacific countries.
Signed by central bank governors from Indonesia, Malaysia, the
Philippines, Singapore and Thailand, the agreement follows steep
declines in regional currencies in the wake of Thailand's
decision to float the baht.
Thailand's Foreign Minister Prachuab Chaiyasarn told reporters
in Kuala Lumpur that ASEAN finance ministers would examine the
issue at their next meeting following their latest gathering in
Phuket.
"The decision by the foreign ministers has to be followed up
for implementation by the finance ministers," he told reporters
here.
Malaysian Foreign Minister Abdullah Ahmad Badawi said attacks
on regional currncies were "stunting our economic progress
because the value of currencies has been adversely affected" by
"these manipulations."
"It is only right that we should express our concern
collectively and also to hope that whatever cooperation is now
developing between the governors of central banks and also
finance ministers could be intensified so that these activities
could be stopped in whatever way."
"Certainly we hope that these activities would be curbed
because at the moment we know that it is causing various
difficulties to our economies," he added.
The Shanghai meeting grouped the heads of 11 central banks and
monetary authorities from five of ASEAN's nine members along with
Australia, China Hong Kong, South Korea, Japan and New Zealand.
Following are the hightlights of the statement issued by the
governors of Asia-Pacific central banks and monetary authorities
in Shanghai yesterday:
"Governors reviewed the current economic and monetary
conditions in the Asia Pacific region, focusing on asset prices
and their implications for monetary policy. They noted that asset
price bubbles could have a significant impact on economic
activity, the health of the financial system and inflation.
Accordingly, developments in asset prices deserve careful
attention. In order to contain asset price inflation, stable
monetary conditions and effective banking supervision should be
maintained. During the one-day meeting, two EMEAP Working Groups
and one Study Group, which were formally created by Governors
last July, reported their activities and achievements
respectively over the previous year.
"EMEAP Governors also reviewed recent developments in the
currency markets in the Region. They noted that the economic
fundamentals of EMEAP economies remained sound. However,
excessive volatility in the currency markets could affect the
maintenance of monetary and financial stability amongst EMEAP
economies. Governors recognized the importance of stability of
foreign exchange markets, which could reflect fundamentals and in
this regard the Governors commended the significant adjustment
made by the Region's economies.
"To strengthen cooperation amongst EMEAP members and to assist
in making the economic adjustments, they directed their Deputies,
in consultation with the relevant domestic authorities and in
cooperation with the International Monetary Fund, to study
arrangements for facilities to assist EMEAP members, where
necessary, to implement adjustment programs.
"In this context, they welcomed the initiatives to strengthen
the financial position of the Fund through the New Arrangements
to Borrow (NAB) and urged that the NAB become operational as soon
as possible.
"Governors also exchanged views on issues relating to EMEAP
development and further cooperation among its members. They
reached consensus on the operation of a Virtual Secretariat
whereby all members are connected with an electronic network
through which they could provide and acquire information among
the EMEAP members. They were unanimous that a closer cooperation
and coordination among EMEAP members is necessary and important
to enhance stability and market developments in Asia Pacific
Region.
"The Governors agreed to hold the next Governors' Meeting in
Tokyo on 14 July, 1998, on the occasion of the BIS Governors'
Monthly Meeting.