May, 2008 (AFP) – Export-driven Asian economies are shifting away from a strategy of keeping currencies weak against the US dollar in an indication of troubling times for the region, a US think tank said Wednesday.
Central banks in Indonesia, the Philippines, Taiwan and South Korea on Tuesday reportedly began selling dollars to shore up their currencies to fight inflationary concerns stemming from surging oil prices.
“The currency-strengthening move undertaken by the central banks Tuesday is a shift in policy,” Stratfor, a US-based private intelligence service, told its corporate clients in a bulletin Wednesday.
It raised the specter of the 1997 Asian financial crisis, when currencies in the region plunged and sent economies reeling into turmoil, the think tank said.
“While the events Tuesday do not necessarily signal the beginning of another crisis, they certainly show that at least a few East Asian countries have hit some sort of threshold,” Stratfor said.
“They can no longer keep up with rising commodity prices,” it said.
While Indonesia, the Philippines, Taiwan and South Korea are lower- and mid-level economies in East Asia, “the decisions by their central banks are important, espe