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W.Bank: Rising Asian currencies pose growth risk

In Uncategorized on October 19, 2010 at 4:21 pm

The World Bank warned Tuesday that capital inflows into fast-growing East Asian economies have inflated regional currencies and could threaten growth by making exports less competitive.


“Appreciating exchange rates so far have not crippled the recovery, but further appreciation will bear close watching,” said the World Bank, pointing out that regional currencies are 10-15 percent above pre-2008 crisis levels.

A bank employee counts notes in Hanoi, Vietnam.

“So far, export growth has remained robust, but with continued real appreciation of East Asian currencies this growth could slow,” a report said.


The World Bank report came as fears grow of a “currency war”, in which nations, trying to export their way back to economic health, are seeking to cap or lower their currencies to make their goods more competitive.


The bank urged regional debate at a Hanoi summit this month, saying “the issues need to be discussed in the context of ASEAN and ASEAN+6, where member countries could fashion a common approach to these regional challenges.”

Source: SGGP