Japan, RP close to forex swap agreement

Japan, RP close to forex swap agreement

TOKYO (Dow Jones): Japan and the Philippines are in the final stages of agreeing on a bilateral foreign exchange swap agreement aimed at reinforcing financial stability in Asia, Japanese Ministry of Finance officials said Wednesday.

A final agreement on the currency swap deal may come as early as next month, and "we will most likely have a deal by summer," a senior ministry official told Dow Jones Newswires, though he declined to comment on the amount of the deal.

The agreement with the Philippines is part of the so-called Chiang Mai Initiative, which is aimed at setting up a regional currency network to prevent the recurrence of the 1997 Asian currency crisis.

The plan aims to link the international reserves of the 10 Association of Southeast Asian Nations countries - Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam - with the three countries of Japan, South Korea and China through a set of bilateral foreign exchange deals.

In May, Japan confirmed a US$3 billion bilateral swap agreement with Thailand, a $2 billion deal with South Korea and a $1 billion agreement with Malaysia when the so-called Asean-plus- three finance ministers met in Hawaii, on the sidelines of the annual meeting of the Asian Development Bank.

In addition to the Philippines, Japan is also in the midst of negotiating a bilateral agreement with China, the officials said.

Though Japan has laid the initial groundwork for a deal with China, negotiations still need to be conducted internally within China, the senior official said. The talks are still in progress.