Shift in Asian currency strategy to fight inflation: report

Sri Lanka's state minister of defence Ruwan Wijewardene (L) takes part in a press conference in Colombo on April 24, 2019. - A Sri Lankan security dragnet hunting those responsible for horrifying bombings that claimed more than 350 lives has scooped up a further 18 suspects, police said April 24, as pressure mounted on politicians to explain why no one acted on intelligence warnings. (Photo by ISHARA S. KODIKARA / AFP) (Photo credit should read ISHARA S. KODIKARA/AFP/Getty Images)

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