Attacks on regional currencies 'may spread'

Attacks on regional currencies 'may spread'

KUALA LUMPUR (Dow Jones): With Russia the latest country to
devalue its currency in the face of growing market pressure,
Malaysia's Prime Minister Mahathir Mohamad yesterday warned that
speculative attacks on developing countries may spread.

"I'm worried that if the attacks on developing nations'
currencies continue, the pressure will spread to other countries
that could have prevented it," Mahathir told a gathering of
workers to mark the country's labor day.

"The currency attack is now at dangerous and irresponsible
levels," he added.

On Monday, the Russian central bank ended months of
speculation and denials by effectively devaluing the ruble by
33.6 percent, as well announcing the forced restructuring of
domestic debt and a moratorium on ruble-denominated debt owed
overseas.

The devaluation move just came weeks after the International
Monetary Fund cobbled together a near-$23 billion package to
stabilize Russia's stressed financial markets. Since Thailand
devalued its baht last July, much of East Asia has been hit with
massive currency depreciations which have spread as far as South
Africa, Eastern Europe and now Russia.

"Russia has a nuclear bomb, they may want to use it now,"
Mahathir joked.

Mahathir has repeatedly stated his belief that Western
interests are hell-bent on destabilizing Asian and other
developing countries. He argues that shadowy forces use financial
markets to wipe out wealth and topple governments, and that
sudden flows of capital should be reined in.

In Southeast Asia, only Mahathir and Singapore's Prime
Minister Goh Chok Tong, have managed to stay in office over the
last year or so.

Mahathir's words don't appear to be lost on the international
community. Agencies such as the International Monetary Fund and
World Bank, as well as individual governments, are now assessing
the need for curbing potential destabilizing capital flows in the
global financial system.

The blunt-speaking premier also expressed his view that since
foreign powers have successfully crippled the country's economy,
they are now preventing Malaysia from recovery.

Citing recent downgrades on Malaysia's sovereign credit
worthiness by Moody's Investors Service and Standard & Poor's,
Mahathir said "They purposely lowered our ratings so that we
cannot afford to pay the interest rates."