Japan Boosting Financial Ties with ASEAN

Tokyo, Dec. 15 (Jiji Press)--The Japanese government and the Bank of Japan are bolstering financial cooperation with the central banks of the member states of the Association of Southeast Asian Nations through various currency accords. The aim is to help ASEAN countries prepare for future economic or financial crises at a time when their local currencies are becoming increasingly unstable. Speculation that the U.S. Federal Reserve will start scaling down its asset purchases soon has prompted investors to pull money out of emerging economies on hopes for higher interest rates in the United States, making their currencies volatile. The region is seen posting further economic growth and many Japanese companies have entered the region due to such prospects. As Japanese and ASEAN leaders met for a special three-day summit through Sunday in Tokyo, the Japanese government and the BOJ expanded or renewed currency swap agreements with some ASEAN member states to provide them with dollars in times of currency and other financial crises. Japan agreed to double the size of the currency swap lines with Indonesia and the Philippines and renew a previous currency swap agreement, which expired in November 2011, with Singapore. Japan has been working to strengthen currency cooperation with countries in the region since the 1997 Asian financial crisis. It has since concluded currency swap agreements with the Philippines, Indonesia, China, South Korea and India. Separately, the BOJ agreed Friday with the Indonesian central bank, Bank Indonesia, on a currency supply agreement. Under the agreement, the third of its kind for Japan with ASEAN countries, Japanese banks lending money to Japanese businesses operating in Indonesia can borrow money in the local currency directly from Bank Indonesia by putting up their Japanese government bond holdings held in their BOJ accounts as collateral. Demand for local currencies is growing as Japanese companies expand business in those countries. But the Fed's "tapering" fears have been draining funds out of emerging economies since May, with the Indonesian rupiah plunging to a five-year low against the dollar on Friday and the Philippines' peso being also unstable. END