Indonesia, Japan commerce talks on currency swap pact

Indonesia, Japan commerce talks on currency swap pact

Dow Jones, Tokyo

Indonesia and Japan have kicked off negotiations to conclude a bilateral currency swap agreement as part of an initiative among Asian nations to promote financial stability in the region, an international financial source said Tuesday, Kyodo News reported.

Officials from the two countries held the first round of negotiations in Jakarta on Wednesday and Thursday last week in the hope of wrapping up the talks at an early date, the source said, according to Kyodo.

Tokyo and Jakarta began the negotiations under the so-called Chiang Mai Initiative intended to create a network of bilateral currency swap accords among the 10-member Association of Southeast Asian Nations plus Japan, China and South Korea.

The planned network is aimed at bolstering the East Asian nations' defenses against the kind of speculative attacks that led to the Asian financial crisis of 1997 and 1998.

Acceleration of efforts to complete the network will be a prominent topic for discussion at a meeting in Shanghai on Friday of the "ASEAN Plus Three" finance ministers.

Japan has already signed swap arrangements with South Korea, Thailand, the Philippines, Malaysia and China. It has also been in talks with Singapore since early March.

Although they are close to striking a deal, Beijing and Seoul will not be able to announce their accord in Shanghai, also the venue for the annual meeting of the Asian Development Bank to be held from Friday through Sunday, the source said.

In addition to a pact with Japan, China has another swap agreement with Thailand. South Korea has been holding negotiations with Malaysia, the Philippines and Thailand.

Finance ministers from ASEAN, Japan and South Korea have been meeting since 1999. ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, Kyodo reported.