Rubin kicks off his Asian tour to clear doubts
Rubin kicks off his Asian tour to clear doubts
LOS ANGELES (Reuter): U.S. Treasury Secretary Robert Rubin set off on Thursday for an eight-day trip to Asia with some explaining to do about America's role in the region.
Rubin, who will go to Indonesia for a weekend meeting of Asia- Pacific finance ministers and then on to India, is hoping to use the trip to enhance U.S. influence in the world's fastest-growing economic area.
"We are a Pacific nation and we must aggressively integrate ourselves into the economies of Asia and the Pacific,"' Rubin told the World Affairs Council here.
But he could face some tough questioning from fellow ministers in the 18-strong Asia Pacific Economic Cooperation (APEC) group about the weakness of the dollar and the fall-out from Mexico's economic crisis.
The dollar's steep fall against the Japanese yen this year has hit Tokyo and some of its fellow Asian nations hard.
Japanese exporters are finding it tougher to turn a profit because of the strong yen. And their travails are threatening to undercut the country's halting economic recovery.
Asian nations like Indonesia are suffering because much of their debt is denominated in yen. In response, some have begun diversifying their foreign currency holdings by selling off dollars to buy yen, raising questions about the greenback's ability to remain the world's key reserve currency.
"Since the dollar is falling and it is called the world's reserve currency, I hope the United States will take an active stance in defending the dollar," Japanese Finance Minister Masayoshi Takemura, who will meet Rubin over the weekend, said on Wednesday.
Strong dollar
Rubin has repeatedly professed his desire for a strong dollar, but the United States has so far shied away from taking tough action to make that a reality.
Washington instead seems content to let Tokyo stew under the pressure from the strong yen, hopeful that will prod the Japanese government into attacking its big trade surplus -- by stimulating its economy to boost demand for imports and by opening up its markets.
Japanese corporations are likely to respond to the yen's latest surge by moving more production facilities offshore to the rest of Asia -- and that could spell trouble for America.
"We have reason to be concerned if Japanese investment in Asia outpaces our own," Commerce Undersecretary Jeffrey Garten said on Thursday during a visit to China.
U.S. prestige has also been bruised by the economic crisis in Mexico, itself an APEC member, analysts said.
The crisis -- which was triggered by a sudden stampede of foreign investors out of the country -- highlighted the risks faced by developing nations that have lifted restrictions on capital flows into and out of their financial markets.
Washington has been pressing emerging market economies in Asia to speed up liberalization of their financial markets, but they have resisted, backed up by Japan.
"The results (of our talks so far) are disappointing," Rubin said. "I will press hard (for better results)."
Washington has threatened to penalize emerging market economies in Asia and Latin America if the they don't come up with better offers of financial market liberalization by June 30.