China, Japan and South Korea agreed to enhance economic cooperation and consider boosting bilateral currency swaps to protect against the global financial crisis, the countries’ finance ministers said.
The ministers said they would “expedite the process” of the Chiang Mai Initiative on multilateral swaps, according to the statement, released after a meeting on the sidelines of the G20 summit in Washington.
South Korea’s Finance Ministry sent the statement by e-mail.
“The Asian region faces challenges including slower economic growth and financial market fluctuations,” the statement said. “We concurred that we should be well-prepared against the adverse effects of the global financial turmoil and the risks of further slowdown in the world economy.”
Any cooperation on currencies would be a victory for South Korean President Lee Myung-bak, who pushed to expedite an Asian foreign exchange pool when he met with Japanese Prime Minister Taro Aso in Beijing last month.
The won is the worst performer among Asian currencies this year, putting pressure on Lee to broker an agreement. The won has fallen 33 percent against the dollar and 42 percent against the yen this year. Investors have sold South Korea’s stocks, bonds and other assets amid fear that a global recession will damp demand for exports, the country’s main growth engine.
Yesterday’s statement could help support the won after the US Federal Reserve on Oct. 30 agreed to provide US$30 billion to the Bank of Korea, said Lee Sang-jae, an economist at Hyundai Securities Co in Seoul.
Still, “the fundamental factors causing dollar shortages in emerging markets, capital outflow because of the US financial crisis, remain,” he said.
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