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Asean F.M. Worry About Weaker Yen (Bloomberg)
By David DeRosa
13/4/2001 7:37 pm Fri
[Lagi satu catatan menarik oleh DeRosa mengenai cadangan tukar-tukar
rezab bank pusat untuk menghadapi krisis matawang.
Yen kini sedang melemah dan mungkin makin merosot lagi kerana polisi
baru 'pelegaan kuantitatif' oleh Bank of Japan (BOJ) untuk membaiki
ekonomi Jepun. Ini bermakna ia akan memberi fokus kepada wang asal
lebih dari faktor makro ekonomi lain. Negara Asean tidak akan mampu
berbuat apa-apa mengenainya melainkan melopong sahaja kerana yen lebih
Tetapi negara Asean cuba merangka program menukar rezab asing bank
pusat atau ala mini IMF pula. Tapi tanpa penglibatan Cina dan Jepun
ini amat merbahaya (kerana mereka rakan dagang penting untuk semua)
Menurut DeRosa, masalah sebenar krisis matawang bukan kerana pasaran
FOREX tetapi kerana kelemahan kerajaan tempatan masing-masing dalam
menguruskan ekonomi domestik. Negara tidak akan terjun ke kancah ini
jika ekonomi diurus baik dan cekap dan semua penyangak dalaman diserkap.
Menukar rezab negara nampak menarik tetapi jika satu lingkup yang lain
pun akan tersadai juga. Balik-balik sendiri juga.
Asean Finance Ministers Worry About Weaker Yen
By David DeRosa
New Canaan, Connecticut, April 8 (Bloomberg) -- Finance
ministers of Southeast Asian nations are meeting this weekend in
Malaysia to discuss their region's economic slump. They have
indicated they also will discus the Japanese yen as well as a
controversial agreement under which their nations can swap
central bank reserves to ward off currency crises.
What worries the ministers is that the yen is at risk of
serious depreciation against the dollar and the euro. That would
put Southeast Asian countries in a jam because yen-denominated
exports would become relatively cheaper in the U.S. and Europe,
leaving Southeast Asian exports at a competitive disadvantage.
The ministers of the regional group Asean, or Association of
South East Asian Nations, may have better luck changing the
weather than changing the yen's course. A weaker yen may be
It is no secret that the Japanese economy is going
backwards. If that isn't bad enough for the yen, consider that
the Bank of Japan last month instituted a major change in its
framework for monetary policy that is destined to be yen-
negative. Under that plan, the BOJ began to institute a modest
program of so-called quantitative easing.
Quantitative easing means the central bank focuses on the
base money supply as its primary target as opposed to other
macroeconomic variables, such as short-term interest rates. The
specific monetary target that the BOJ picked was what it calls
``current account balances,'' something known in other major
economies as the total of commercial bank reserve deposits held
at the central bank.
If the BOJ persists in this policy, it is likely that the
yen will weaken. It stands to reason that the increased supply of
yen from the quantitative easing will soon manifest itself in
higher Japanese consumer prices (or at least go a long way toward
eradicating the current deflation in consumer prices being
experienced in Japan). More money chasing the same quantity of
goods in an economy eventually must show up in higher prices.
Parenthetically, there is a counterargument: some people
think the BOJ may end up strengthening the yen. If the new
monetary policy turns out to be a big success, the economy would
rebound and foreign investors might become interested in Japan
again. To buy Japanese stocks, one has to also buy yen.
But I think this is probably a second-order effect because
Japan's recovery is years away. Meantime, the BOJ is likely to
weaken the yen, though it will deny so vigorously. So Southeast
Asia does have a weak yen problem. And there is not a darn thing
the ministers can do about it.
I note with some amusement that the latest anti-foreign
exchange market gambit to come out of Asia is an agreement under
which certain central banks would be able to swap each other's
foreign reserves in the event of a currency crisis. One could
suppose that some people in Asia envision this as a first step in
the creation of an Asian Monetary Authority.
As I mentioned above, this is on the Asean finance
ministers' agenda for discussion. It is thought that China, Japan
and South Korea look favorably on the reserve-swapping plan.
This is a dangerous idea. For one thing, I don't believe
currency crises are manufactured in the foreign exchange market.
Rather, they are the product of faulty domestic financial policy
decisions, like the installation of loosely pegged exchange-rate
regimes. If the domestic economy is well run, there won't be a
currency crisis, and new arrangements like the reserve-swapping
idea won't be necessary.
Things Happen for a Reason
Over the years, I have become convinced there is really no
such thing as spontaneous financial contagion. What appears to be
contagion really derives from a set of common economic conditions
that are predisposed to crisis.
But the reserve-swapping agreement could actually add a new
meaning to so-called contagion theory. One central bank could tap
into another's reserves to support its currency. It sounds good,
because what could be wrong with having central banks band
together to help one another in a crisis?
Then you think about it some more. Under this scheme, a central bank might be able to materially drain the balance sheets of other regional central banks because it could go through its own reserves and then dip into the others' reserves. One goes down, the rest get pulled down. Any design that could lead to a systemic weakening of central bank balance sheets in a region is a sure path to crisis.