LONDON - Asia must find ways to use its huge forex reserves within the region because investing in American assets may be inefficient, says South Korean Finance Minister Han Duck-soo.
Asian officials were discussing ways to spend the reserves in the region, such as activating the regional bond market. But the move would be gradual, he said.
Asian countries have combined foreign exchange reserves of US$2.73 trillion ($4.40 trillion) and are major buyers of US treasury bonds. Any move by Asia to diversify could affect Washington's ability to bridge its yawning current account gap.
Han said Asian countries had also been discussing the strengthening of the Chiang Mai Initiative (CMI) - a framework that involves a web of bilateral currency swaps to give the region's authorities firepower to fight any balance of payment or currency crisis such as the one seen in 1997.
Han saw the turmoil in emerging markets as a temporary correction after strong recent growth. Equity and commodity markets worldwide have suffered steep declines because investors were concerned about the global economy.
- REUTERS
Asia considers forex switch from US assets to region
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