Asian countries to talk currency swap

Asian countries to talk currency swap

TOKYO (Reuters): Deputy finance ministers of the 10 ASEAN members plus Japan, China and South Korea are due to meet in early April to discuss arrangements for a region-wide currency swap plan, Japanese government sources said on Tuesday.

The meeting will be held on April 7 and 8 on the sidelines of the Association of Southeast Asian Nations (ASEAN) meeting of finance ministers in Kuala Lumpur, the sources said, declining to be identified.

The ambitious Tokyo-led plan for an Asian web of currency swaps designed to head off future financial crises was agreed to among the 13 nations at a meeting of finance ministers in Chiang Mai last May.

But the plan has recently run into difficulties due to Malaysia's reluctance to give the International Monetary Fund (IMF) a key role in the scheme, which pegs the actual fund disbursements to reforms supervised by the fund.

Financial market sources said that other countries are also wary of strict conditionalities attached to the swap deal.

However, one Japanese Finance Ministry official said the only topics left to be resolved were technical issues such as which interest rate would be used when the swap arrangement is tapped.

A senior official from Japan's Ministry of Finance (MOF) will attend in the place of Haruhiko Kuroda, the vice finance minister of international affairs, the sources said.

Finance ministers of the 13 nations will later meet in Honolulu on May 9 on the sidelines of an annual meeting of the Asian Development Bank (ADB).

Japan already has a $5.0 billion short-term swap arrangement with South Korea and a $2.5 billion, ironically, with Malaysia.

Both swap lines were established under the $30 billion aid package under the Miyazawa Initiative launched in October 1998.

Tokyo has not decided on whether the existing swap arrangements would be included in the new region-wide framework.

Japan is currently negotiating a swap deal with Thailand and the Philippines, a senior Japanese MOF official said, declining to be identified.

"We have been hoping that a few swap deals would be reached by the ADB meeting in May," he said.

The amount of the swap line for Thailand is likely to be in the neighbourhood of the one for Malaysia, the government sources said.

The Nation, a Thai newspaper, said on Tuesday Thailand and Japan are close to concluding a bilateral currency swap arrangement within the next few months.

ASEAN consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.