South Korea, Japan and China agreed to set up regular meetings to consult on issues facing the regional economy and work more closely to help counter challenges stemming from the global financial turmoil.
Strengthened cooperation was necessary “to cope with the situation, in an effective manner, where the world economy and the financial markets are facing serious challenges,” South Korean President Lee Myung Bak, Japanese Prime Minister Taro Aso and Chinese Premier Wen Jiabao (溫家寶) said in a joint statement.
The leaders met yesterday in Fukuoka, Japan.
The summit comes a day after South Korea agreed on bilateral currency swap accords with Japan and China, the world’s biggest holders of foreign reserves, in an effort to ensure financial stability in Asia. South Korea and Japan will increase an existing won-yen arrangement to US$20 billion while China and South Korea agreed on an accord worth 38 trillion won (US$28 billion).
“Asian countries are expected to play a role as the center of world economic growth in order to reverse the downward trend of the world economy and return it to the path of sustainable growth,” the leaders said in the statement provided by the South Korean presidential office. “Our economies are dynamic, resilient and closely interlinked.”
South Korea’s Lee pursued the swap arrangements to secure access to funds and prevent a repeat of the 1997 currency crisis that caused the won to plunge and required a US$57 billion bailout from the IMF.
The won rose 7.5 percent against the dollar this week, completing the best weekly gain since the end of October, partly in anticipation of Friday’s announcements.
“The currency swap increase provides further funds in case of a liquidity shortage and a financial emergency,” said Oh Suk Tae, an economist with Citigroup Inc in Seoul. “The three nations want to get together to solidify their cooperation so they can better counter global turmoil.”
South Korea, Japan and China yesterday agreed to facilitate trade and investment in the region and “confirmed the significance of measures that will reinforce growth and expand domestic demand,” the statement said.
The countries will “refrain from raising new barriers to investment or to trade in goods and services, from imposing new export restrictions,” it said.
The three nations account for 74 percent of East Asia’s GDP and two-thirds of regional trade volume, the Japanese foreign ministry said.
The leaders said they will work with the members of ASEAN to speed up a plan agreed earlier this year that extends the so-called Chiang Mai Initiative, a deal allowing countries to lend each other money at favorable terms if help is needed to support exchange rates.
Finance ministers from 13 Asian nations, including South Korea, Japan and China, agreed in May to create a pool of at least US$80 billion in foreign-exchange reserves.
The leaders also reiterated a commitment to strengthen monitoring of the regional economy and financial markets, the statement said yesterday.
China wants contributions to the US$80 billion fund to be made in accordance with the size of each country’s foreign-exchange reserves while Japan wants to use the value of GDP as a measure, South Korea said earlier this year. The remaining 20 percent of the fund will be provided by the 10 members of ASEAN.
South Korea, Japan and China will hold the trilateral summit on a regular basis and will meet in China next year. The three nations will also share information on natural disasters and develop ways to “reduce vulnerability” to disasters and minimize the damages, they said.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS