Japan, SE Asia in talks to expand currency swap
TOKYO (AFP) - Japan and Southeast Asian countries are in talks over expanding currency swap arrangements to help cushion their economies in financial emergencies, an official said Thursday, ahead of a Japan-Asean summit next week.
A swap is a device useful in times of economic stress, when normal foreign exchange markets can seize up, in which financial authorities agree to buy local currency with something much more liquid - usually the US dollar.
Tokyo is now talking with five countries - Indonesia, the Philippines, Malaysia, Thailand, and Singapore - to expand or resume bilateral currency swaps, a finance ministry official told AFP.
Since the onset of the Asian currency crisis in the late 1990s, Japan has spearheaded efforts to build a multilateral currency swap agreement, now known as the Chiang Mai Initiative (CMI).