ASEAN Plus 3 voices concerns over excessive exchange rate volatility; pursuing exchange rate stability

Japan, China, South Korea, and ASEAN express concerns over currency depreciation and exchange rate volatility. Finance ministers emphasize stability, amid discussions on regional cooperation and economic risks.

According to reports, Japan, China, South Korea, and the Association of Southeast Asian Nations (ASEAN) expressed shared concerns on Friday about excessive exchange rate fluctuations caused by speculation amid the continued depreciation of their respective currencies against the U.S. dollar in the foreign exchange market.

Sources stated that the ASEAN Plus Three group, which held a meeting of their finance ministers and central bank governors in Tbilisi, adopted a joint statement that included “heightened foreign exchange market volatility” as a risk to the regional economy.

Speaking at a press conference, Japan’s Finance Minister Shunichi Suzuki emphasized that stable movement of exchange rates is desirable, stating “excessive moves are undesirable.”

Reports indicated that concerns about inflation are increasing in Asian countries as their currencies weaken against the U.S. dollar. It was mentioned that the Thai baht has fallen more than 7% against the dollar since the beginning of the year, while the Indonesian rupiah has also declined 5%, prompting the Indonesian central bank to raise interest rates for the first time in six months in April.

Officials noted that the Japanese yen had also temporarily dropped to the lower ¥160 range against the dollar on April 29, its weakest level in about 34 years, before immediately soaring to the ¥154 level. It was noted that the previous Thursday saw the yen strengthen, moving from the ¥157 level to the ¥153 range in under an hour.

The yen hovered around the upper ¥152 level against the dollar at Friday’s New York market close, later fluctuating to the upper ¥151 range. Suzuki declined to comment on potential foreign exchange intervention by Japan’s government and the Bank of Japan but mentioned the need to address excessive market movements.

During the meeting, the ASEAN Plus Three group formally decided to expand the Chiang Mai Initiative, a regional currency swap arrangement, and establish a framework for addressing emergencies like infectious disease outbreaks.

Additionally, Japan’s finance ministers met with counterparts from Pacific island nations for the first time, agreeing to collaborate on climate change and other pertinent matters.