http://www.boston.com/dailynews/098/world/Japan_assures_Southeast_Asia_t:.shtml

Japan assures Southeast Asia that yen won't be allowed to fall intentionally

By Patrick Mcdowell, Associated Press, 4/8/2001 09:44

KUALA LUMPUR, Malaysia (AP) Southeast Asia's finance ministers said Sunday that they were bracing for lower growth this year, expecting the plunge in the U.S. stock market and Japan's fragile economy to put smaller countries at risk.

With some Southeast Asian currencies sinking to levels last seen during the Asian financial crisis of 1997-98, the ministers said in a statement that they would be taking ''pre-emptive measures to mitigate the economic slowdown.''

The ministers from the 10-member Association of Southeast Asian Nations concluded a two-day meeting on Sunday.

Officials met later in the day with representatives from Northeast Asian powerhouses Japan, China and South Korea.

A senior Japanese Finance Ministry official told The Associated Press and Dow Jones Newswires that Japan assured the Southeast Asians who received the news positively that the yen would not be allowed to depreciate intentionally against the U.S. dollar.

The official, speaking on condition of anonymity, declined to say at what point Tokyo would act to support the yen, which sank to its lowest level since October 1998 last week before the government announced a rescue plan for Japan's troubled banks on Friday.

Earlier, the ministers issued a statement noting their economies bounced back in 2000 from the Asian crisis but that recent currency volatility in Japan and the economic downturn in the United States both major export markets could harm growth this year.

Malaysian Finance Minister Daim Zainuddin said ASEAN would not ''interfere'' with Tokyo's efforts to salvage the Japanese economy after a decade of stagnation, most recently by effectively lowering interest rates to zero to stimulate consumer spending.

''If they're successful, that's good for all of us,'' Daim said. ''If they consume more, then we can export to Japan.''

The ministers pushed ahead on arrangements to bolster each other's currencies in case of a new financial crisis, announcing Saturday that they enlarged a currency-swap agreement started last year to include all 10 countries and increased its size to $1 billion.

They also are developing a way for ASEAN members to strike bilateral currency support deals individually with China, Japan and South Korea. Thailand said it was already negotiating with Japan and South Korea.

Malaysia, proud to have avoided going to the Washington-based International Monetary Fund in 1997 for a bailout, initially opposed linking currency supports to IMF programs.

But Malaysia was forced to accept a consensus that the arrangements with China, Japan and South Korea would have to complement IMF measures.

ASEAN is Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, which is also known as Burma, the Philippines, Singapore, Thailand and Vietnam.

-- Anonymous, April 09, 2001