Group of 15 backs proposal for new currency rules

Group of 15 backs proposal for new currency rules

KUALA LUMPUR (Reuters): The Group of 15 (G-15) developing nations rallied yesterday behind Malaysia's call for currency trading rules and ordered a plan to avert renewed market turbulence that has shaken Southeast Asia's economies.

G-15 leaders ended a three-day summit in Malaysia's capital with an agreement to meet more often to improve the coordination of positions, and moved up their next meeting to May 1998 in Cairo.

The seven-year-old bloc called on rich nations to provide greater access to their markets and capital, and denounced a U.S. trade law that authorizes unilateral trade sanctions.

The host, Malaysian Prime Minister Mahathir Mohamad, succeeded in thrusting the currency issue to the top of the summit agenda.

Currencies and stock markets in Malaysia and other Southeast Asian nations have been undermined by a massive selloff since July, when a financial crisis erupted in Thailand.

"This issue of the practices of many market people is like a virus," said National Planning Minister Ayo Ogunlade of Nigeria. "It knows no boundaries. It has affected Southeast Asia and Latin America...It could also affect Africa."

The G-15, which on Monday adopted a special statement expressing deep concern over the currency turmoil, announced on Wednesday that member states' finance ministers will meet next month to make foreign exchange trade recommendations.

"They will draft rules and regulations to be submitted to the IMF," Mahathir told a news conference.

Mahathir said the officials would meet at the same time as finance ministers from the Association of South East Asian Nations (ASEAN), set to gather on Dec. 1 and 2 in Kuala Lumpur.

The head of the International Monetary Fund, Michel Camdessus, was expected to present a paper on currency trade at the ASEAN meeting.

"The recommendations will be circulated to the heads of government for approval immediately," Mahathir said in a speech to the concluding session. "The heads of government are expected to forward these to the IMF and the World Bank."

Mahathir said there were rules governing stock markets but none in currency markets.

"We need to know where the money is coming from. Is it hot money, money laundering?" he said. "Sometimes they are dealing with drug money, so regulations should be drawn up to make sure that they trade in real money and they pay real taxes."

Indonesia President Soeharto said his country, backed by an IMF recovery plan, had recovered from its financial crisis.

"The monetary crisis in Indonesia is a matter of confidence in our rupiah, in our currency. We have recovered," he said.

The G-15 members are Algeria, Argentina, Brazil, Chile, Egypt, India, Indonesia, Jamaica, Kenya, Malaysia, Mexico, Nigeria, Peru, Senegal, Venezuela and Zimbabwe. Kenya was admitted to the group on Monday.

The heads of state or government from six nations -- Algeria, Egypt, Indonesia, Malaysia, Peru and Zimbabwe -- attended the summit, prompting debate over low attendance.

The leaders rejected a proposal to meet every two years, and moved up the next meeting to May 1998.

In a joint communique, the G-15 leaders called for greater access to rich nations' markets, capital and technology, and denounced a U.S. trade law that authorizes Washington to impose unilateral sanctions.