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)