Asian forex, stocks to take center stage at IMF talks

Asian forex, stocks to take center stage at IMF talks

WASHINGTON (Reuter): U.S. Treasury Secretary Robert Rubin on Tuesday said Southeast Asian currency and stock markets would take center stage at the International Monetary Fund and World Bank meetings in Hong Kong later this month.

"One of the paramount issues in the meetings in Hong Kong ... will be the currency and stock market conditions in Southeast Asia," Rubin said in an interview on Cable News Network's "Moneyline" program.

"More generally, the questions of financial stability in Southeast Asia." he added.

Rubin said he was confident sound economic policies would lead to financial stability in the region.

"If (they) stay on a good policy path, I have confidence they will re-establish financial stability," he said.

"I think the key for all of those countries is to pursue sound policies, transparency disclosure, make sure they get ahead of the curve with respect to the problems in their banking systems, (and) avoiding arbitrary regulations that reduce confidence in the international financial markets," he added.

Rubin said at the Hong Kong meetings, where the Group of Seven industrial nations will also gather, that the Japanese economy will also be a focus.

When asked whether he shared the views of Treasury Deputy Larry Summers -- who recently voiced concern that Japan may neglect its commitment to spur domestic demand and focus on exports instead -- Rubin reiterated Japan's stated commitment to demand-led growth.

"Prime Minister Hashimoto has said ... Japan was committed to domestic demand-led growth and to avoiding a significant increase in current account surpluses," Rubin said.

"It is very important for Japan and the United States and the rest of the world that challenge be met."

Summers said in an interview in Tuesday's Financial Times newspaper in London that Washington was still concerned about Japan's economy and was keen that Tokyo promote domestic demand rather than imports.

His remarks sent the dollar tumbling against the yen in Tuesday currency trade in Asia, with the greenback falling as low as 118.40 in afternoon trade from a close of 121.15 yen in U.S. trade on Monday.

In the CNN interview, Rubin acknowledged a private sector view held by some that Japan's growth is "not as vibrant as one might have wished" and that the direction of trade surplus growth is "not consistent with the notion of avoiding sustained, significant increases in surpluses."

"When we are in Hong Kong, Larry and I will both be there with the Japanese Finance Minister and we will be discussing these very issues; try to get a much better sense of what is happening in the Japanese economy," Rubin said.

Regarding the U.S. economy, the Treasury Secretary said the U.S. economy was "doing well' and that the most likely scenario for the future remains "solid growth and low inflation", adding the U.S. should not back track on fiscal discipline.