ASEAN KEY DESTINATIONS
Trade and currency on the table
By David Swartzentruber
With Asean Affairs reporting daily on the soaring stock markets in individual Asean member countries and the concurrent appreciation of their currencies, it is with some relief that we welcome that the G-20 meeting has kicked off in South Korea.
First off the mark is a proposal by U.S. Treasury Secretary Timothy Geithner to have emerging nations set targets to reduce their trade surpluses with western nations. Geithner's concept is to set numerical targets for current account balances whether they are surpluses or deficits to reduce conflicts over exchange rates by allowing the currencies of trade surplus countries to rise together.
Over time, the plan, it is said, would eliminate Asia’s vast trade surpluses with the west.
The proposal hit immediate resistance by the Japanese, who called the ideas of specific targets unrealistic, and garnered approval from Canada.
The immediate issue is the devaluation of currencies by countries to gain competitive advantage that could stifle the world economic revival. The rise in Asian currencies is due to the inflow of so-called hot money searching for higher returns triggered by the lower value of the U.S. dollar and lower interest rates in developed countries. Many countries, among them Thailand and Philippines,
have tried to stop the rise in currencies by direct market intervention and imposing capital controls or taxes on foreign investment bonds.
It is important for some acceptable plan to emerge from these meetings to stabilize the world economy and continue the road to recovery.
The current G-20 meeting sets the agenda for a November 11-12 meeting of the G-20 leaders.
Comment on this Article. Send them to email@example.com
Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below