SE Asian economies are more resilient: MAS

SE Asian economies are more resilient: MAS

SINGAPORE (AFP): Southeast Asian economies have the strength
to shield themselves from the effects of Mexican-style financial
crunch elsewhere in the world, according to the Monetary
Authority of Singapore.

Cooperation among central banks in the region "had deepened
and will continue to deepen," aiding management of exchange rate
policies if regional currencies came under speculative attack, it
said.

A sudden devaluation of the Mexican peso in December 1994
resulting from the country's huge current account deficit sent
the so-called exotic currencies of Southeast Asia into a tailspin
in early 1995.

The Indonesian rupiah, Malaysian ringgit, Philippine peso,
Thai baht and even the Hong Kong and Singapore dollars came under
pressure as foreign investors feared the crisis would spread to
emerging Asian markets.

"Almost two years have passed and there is now a much better
international appreciation for the good fundamentals here
(Southeast Asia)," Singapore's de facto central bank told AFX-
Asia, an AFP-affiliated financial news wire.

"A currency crisis in another part of the world is unlikely to
tar Asian countries in the same way as before," the Monetary
Authority of Singapore (MAS) said in a written reply to questions
submitted by AFX-Asia.

The MAS explained that the Mexican peso crisis spread to
Southeast Asia "largely due to a lack of understanding by foreign
investors of the fundamental economic and financial conditions"
in the region.

Most Southeast Asian central banks have signed currency
repurchase agreements to signal to the market the widening pool
of ready credit available to maintain currency stability in the
region, analysts say.

The MAS said cooperation among the central banks would not in
itself deter speculative attacks on regional currencies.

"But should any speculative attacks occur, the rapid and easy
exchange of information that has developed among central banks
and the network of bilateral repurchase agreements already in
place would give flexibility to central banks in managing their
exchange rate policies," it said.

On economic growth in the Association of Southeast Asian
Nations (ASEAN) area, MAS said it expected growth in the region
to slow down to a still healthy rate over the next two years.

It said however that this moderation in growth due largely to
a slowdown in exports, in some cases, provided a welcome respite
from overheating.

Apart from Singapore, ASEAN comprises Brunei, Indonesia,
Malaysia, the Philippines, Thailand and Vietnam.

Within ASEAN, exports of Singapore and Malaysia in particular
had been affected by the downturn in the demand for electronics,
MAS said.

Electronics account for about 60 percent of Singapore's
domestic exports and half of Malaysia's exports.

Thailand and Indonesia, which are less dependent on
electronics exports, have also seen weak growth for exports of
lower-end products such as textiles and footwear, MAS said.