Political motive could be behind currency flurries

PETALING JAYA, Malaysia (JP): ASEAN countries expressed concern here yesterday over the currency flurry hitting several member states, with some suggesting that the crisis might be politically, not economically, motivated.

Malaysia's Prime Minister Mahathir Mohamad, with typical flair and vigor, said there is "a well-planned effort to undermine the economies of all ASEAN countries by destabilizing their currencies."

"Our economic fundamentals are good yet anyone with a few billion dollars can destroy all the progress we have made," he said yesterday at the opening ceremony of the 30th ASEAN Ministerial Meeting.

ASEAN, which now comprises Brunei, Indonesia, Laos, Malaysia, Myanmar, the Philippines. Singapore, Thailand and Vietnam, has been hit by a surge of currency speculations, causing a drop in several national currencies.

Thailand's baht was first to waver early this month due to a crisis in the property sector. The trend spread quickly and the Philippine peso, Indonesian rupiah and Malaysian ringgit soon came under speculative assaults and subsequently dropped.

In Singapore, the U.S. dollar rose yesterday to 31.90 Thai baht from 31.30 at the previous day's close, 1.4768 Singapore dollars from 1.4684, 2. 6495 Malaysian ringgit from 2.6495 and 2,604 Indonesian rupiah from 2,585.

Mahathir said ASEAN may consider formulating laws to curb speculative attacks on the region's currencies.

"In the first place, (we'll) have a common stand on how to deal with this issue and if there is a necessity to formulate some laws regarding our currencies, we will do so.

"We are examining areas of possible cooperation," he told reporters after opening the ASEAN ministerial meeting.

While there were no specific proposals, Mahathir said ASEAN would use its cooperative spirit to combat the speculative assault.

"Certainly by working together we can increase our clout and we would be able to deal with this kind of problem which is common to us," he said.

Indonesian Foreign Minister Ali Alatas agreed with Mahathir's remark, saying that there appeared to be an effort to shake Southeast Asian economies.

He maintained that such currency speculations should not have occurred in countries whose policies were economically sound.

"When a certain economy shows weaknesses in its fundamentals, speculators come in to cash in on those weaknesses, that is one thing. But if economies which have done nothing wrong in their macroeconomics, which have very strong positions, yet have to face the onslaught by speculators on their currencies, one questions the motivation of that," Alatas said.

"I believe it is quite natural to ask what is going on here," he said. "Is this a concerted effort which is not prompted by economic forces alone but by political motivations?"

When asked, Alatas said the issue would likely be discussed during the ministerial meeting, but he warned that the foreign ministers could not delve into as much detail as their economic counterparts.

Mahathir, in his address, lashed out at the developments, pointing to them as another example of how developing countries were continuously being prostrated.

"We are told we must open up, that trade and commerce must be totally free. Free for whom?" he asked. "For rogue speculators? For anarchists wanting to destroy weak countries in their crusade for open societies, to force us to submit to the dictatorship of international brigandage?"

Later in the day, he told journalists that ASEAN central banks should work more closely together and that governments may consider formulating laws to curb attacks on their currencies.

He did not go into details, saying that the first step is to adopt a common stand.

Thai foreign minister Prachuab Chaiyasan also stressed the importance of ASEAN members cooperating to fight this negative development.

"Against this new security threat, ASEAN must further deepen its cooperation to fight against all forms of international economic crime," he said.

Mahathir also said that while they could be improved, the economic fundamentals of the ASEAN states being attacked were good.

"Problems like export slowdown and overexposure of property lending are bound to happen in any country, but I would not say our fundamentals are not good ," he said, adding that "most ASEAN companies are doing rather well in comparison with those in Europe."

Despite his strong accusations, Mahathir refused to answer when asked who the "rogue speculators" were. "I think you know what it means as much as I do. I don't want to name them." (swe/mds)