Currency swings belie fundamentals: APEC
Currency swings belie fundamentals: APEC
SANUR, Bali (JP): Finance ministers of the Asia Pacific Economic Cooperation (APEC) forum expressed concern yesterday over the recent currency swings which, they said, do not reflect economic fundamentals.
"We agreed that there should be a determined effort to attain stability in the foreign exchange market as such stability would benefit all member economies," the ministers said in a joint statement after holding four working sessions.
The statement did not specifically mention the more than 18 percent appreciation of the Japanese yen against the U.S. dollar since March but the ministers confirmed that the meeting devoted a great deal of attention to the yen-dollar rate volatility and its impact on member economies.
Most of the questions raised by journalists at yesterday's news conference were also related to the yen-dollar rate gyration.
"But we didn't touch at all on the question whose fault the volatility is," Indonesia's Finance Minister Mar'ie Muhammad, who chaired the meeting, said.
Mar'ie said the ministers had reached full agreement that macro-economic stability and balance were of fundamental importance to ensuring a stable exchange rate.
"That means control over inflation and sustainable deficits, both fiscal and external," the ministers' statement said, adding that exchange rate policies must form an integral part of overall macro-economic policy in each member economy.
The problem of exchange rate movements was a new topic of discussions yesterday. The issue was added to the other three major areas, which constituted the agenda of the first finance ministers' meeting in Honolulu, Hawaii, in mid-March, 1994.
Japan's Finance Minister Masayoshi Takemura and his U.S. counterpart, Robert E. Rubin, held a separate meeting before the morning session yesterday to discuss the exchange rate volatility.
The two ministers said they were in agreement that the current yen-dollar exchange rate movements did not by any means reflect the economic fundamentals of Japan and the U.S.
"We will continue to consult closely and to cooperate as appropriate on exchange market issues," Rubin said.
Both Rubin and Mar'ie expressed support for the economic stimulus package announced by Japan last week, which included a cut in the key discount rate by 0.75 percentage points and quicker deregulation.
"I am quite impressed by the Japanese measure and we should give it some time before we make any comment or analysis," Mar'ie said at a separate news conference yesterday.
Rubin said the package touched upon the right point, while Takemura said there would be additional measures in another month or two.
"What we need to do is to see how the market and market analysts react to it. It is too premature to judge it now," Rubin told a separate news conference he held soon after the joint press meeting.
He reaffirmed the U.S. commitment to strengthening the economic fundamentals that are ultimately important to maintaining a strong, stable currency.
"We believe a strong dollar is in America's interest," Rubin reiterated. (vin)