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.