Camdessus says Asia currencies fell too far

Camdessus says Asia currencies fell too far

LONDON (Reuters): International Monetary Fund (IMF) chief Michel Camdessus said yesterday that Asian currencies had fallen too far following the financial crisis in the region.

In an interview with the Financial times, Camdessus also defended the IMF against charges it had failed to see the Asian financial crisis looming and blamed Asian governments for failing to avert trouble.

Camdessus defended the sharp rises in interest rates in the Asian countries that followed the imposition of IMF programs, saying these had to be seen in the context of the collapse in confidence in the region.

The IMF had not intended to produce a big depreciation in currency values, Camdessus said.

"On the contrary, in our view these currencies have depreciated far more than is warranted or desirable," he said. "The first order of business was, and still is, to restore confidence in the currency," Camdessus said.

The IMF managing director said the Fund had seen the problems developing in Asia but had been unable to persuade the governments to act early enough.

"A point that is central to analyzing the cause of the crisis is the denial syndrome," Camdessus told the Financial Times in the interview in New York.

After 30 years of economic success, the Asian nations felt a sense of "impregnability", Camdessus said.

He had visited Bangkok four times, twice in secret, but failed to persuade the Thai government to unpeg its currency from the dollar, the newspaper said.

It said the IMF was also hampered by having unreliable economic data.

Camdessus declined to say whether he believed the crisis was over and instead considered the prospects for individual countries.

South Korea was "turning the corner", Camdessus said. "The (Seoul) government not only wants to implement the program but go beyond it if needed..."

"I would say, with perhaps a little less emphasis, the same about Thailand, where the authorities are extremely determined to implement the programs," he added.

But on Indonesia, Camdessus "implied" that the problem was largely political and that prospects remained murky until, the president chooses a running mate in the coming elections.

Camdessus said he had received assurances from Chinese leaders that they would not trigger a further crisis by devaluing their currency in proportion to their neighbors'.

"He sounds rather less confident about the ability of the Japanese government to take the steps needed to restructure the banking system and provide a fiscal stimulus to its ailing economy," the Financial Times said.