Asian govts react to turmoil

TOKYO: Asian governments moved quickly yesterday to dampen the effects of the global turmoil triggered by the Greek debt crisis.

Japan's central bank said it would inject more than US$20 billion (S$28 billion) in liquidity to calm markets, while its counterparts in India and Indonesia intervened in the markets to shore up their sliding currencies.

The Malaysian and South Korean authorities vowed to defend exchange-rate stability amid concern that Europe's debt crisis will worsen.

In Singapore, the Monetary Authority of Singapore said it will respond to the market turmoil if there is a need. It 'continues to monitor international developments closely as well as their impact on our markets', a spokesman said in response to questions from Bloomberg News.

'We will take appropriate actions where necessary.'

The yen's surge and sharp falls in Tokyo share prices have alarmed Japanese policymakers.

The Bank of Japan offered 2 trillion yen (S$30.51 billion) in funds to financial institutions in an emergency market operation aimed at soothing market jitters.

Japanese Prime Minister Yukio Hatoyama said yesterday he was 'very worried' about the market moves and said the government will act accordingly if needed, without elaborating.

India's rupee fell to a two-month low yesterday.

'The Reserve Bank of India has supported the rupee intermittently since yesterday as things move from bad to worse in the global financial markets,' said Mr J. Moses Harding, a Mumbai-based executive vice-president at IndusInd Bank Ltd.

'I think the RBI is only trying to cushion currency weakness and check volatility rather than influence direction.'

Indonesia's rupiah had its worst week since June, dropping as much as 2.7 per cent against the US dollar yesterday before recouping its losses on speculation the central bank intervened.

Officials in Indonesia and the Philippines ruled out imposing capital controls in response to the market turmoil.

The Indonesian monetary authority 'is always in the market to smooth currency volatility', said Ms Lindawati Susanto, head of currency trading at PT Bank Resona Perdania in Jakarta.

Australia's central bank, meanwhile, warned that an escalation of Europe's debt woes may cause a 'sharp' global economic slowdown.

BLOOMBERG, REUTERS, AGENCE FRANCE-PRESSE

Source: Straits Times, 8 May 2010