Central bank Governor Perng Fai-nan (彭淮南), who is attending the annual meeting of the Asian Development Bank (ADB) in Bali, Indonesia, yesterday urged Asian countries to set up a regional exchange rate mechanism to maintain the stability of Asian currencies.
Established in 1966, the goal of the ADB is to reduce poverty in the Asia-Pacific region by promoting equitable and environmentally sustainable economic growth.
“One of the most important actions that can be taken to address the global financial crisis is to strengthen regional cooperation,” Perng told the international body’s 42nd annual assembly.
The ADB should take the lead in furthering cooperative relationships among member countries in light of its extensive experience, highly qualified staff, advanced technology and other resources, Perng said in a faxed statement.
Headquartered in Manila, the regional organization has 67 members, including 48 from the region. Taiwan is a founding member.
Lin Sun-yuan (林孫源), the director-general of the central bank’s department of foreign exchange, said in Taipei that the proposed exchange rate coordination regime, if realized, could help shield a member country’s currency from the negative effects of hot money.
The South Korean won, for instance, has fluctuated drastically in recent months and only appeared to regain stability recently, Lin said.
He said the ADB could set aside a fund and lend money to members whose currencies experienced excessive fluctuations caused by speculators.
The central bank has voiced concern that the New Taiwan dollar is being negatively affected, with the currency picking up 1.1 percent this year while economic fundamentals remain dismal.
Owing partly to capital influx, the nation’s foreign exchange reserves rose US$4.537 billion last month to a new high of US$304.66 billion, Lin said.
He attributed the increase to the central bank’s management strategy, as well as gains in foreign exchange reserves denominated in the euro, the pound and other currencies.
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