Asian currency crisis threatens world: Chuan

Asian currency crisis threatens world: Chuan

BANGKOK (AFP): Thai Premier Chuan Leekpai warned yesterday that the Asian currency storm which has seen local units sink to record lows will also affect "economies of developed countries.

Chuan made the comment as regional currencies slumped to record new lows as the Korean won crashed over the country's economic woes.

Chuan said the currency dilemma would be high on the agenda of leaders of the Association of Southeast Asian Nations when they meet in Malaysia next week for an informal summit.

"We will talks about it as this problem will also affect developed countries such as the United States," the prime minister told reporters, explaining that the West had made massive investments in once-booming Asia.

He cited U.S. President Bill Clinton as saying that one third of U.S. foreign investment was in this continent.

The Thai baht hit an historic record of 43.55 to the dollar Thursday, a dip of more than 40 percent since the currency's effective devaluation in July, the event which sparked Southeast Asia's current turmoil.

Chuan said the latest dip was sparked by the regional economic troubles, not domestic Thai issues, adding that the baht would rally when a new commercial bank was set up to deal with the assets of 56 permanently closed finance firms.

The government on Monday shut all but two of the- 58 suspended firms in a bid to limit the damage to the embattles economy posed by the companies' massive bad debts.

It announced it would set up at least one commercial bank to dispose of the good assets of the firms once they had been separated from the bad over the coming months.

Investors have welcomed the authorities' action, but are waiting to see how the firms' assets will be dealt with.