http://online.wsj.com/article/SB10001424052702304316404575579881594811488.html
OCTOBER 29, 2010 Currencies, Myanmar to Dominate Asia Summit By JAMES HOOKWAY European Pressphoto Agency >From left, Malaysia's Najib Razak, Myanmar's Thein Sein, the Philippines' Benigno Aquino III, Singapore's Lee Hsien Loong and Thailand's Abhisit Vejjajiva in Vietnam on Thursday. HANOI-Asia's sharply rising currencies and an upcoming election in military-run Myanmar are set to dominate an annual regional summit in Vietnam this weekend, with Southeast Asian nations already pushing for fresh efforts to prevent sudden foreign-exchange swings from undermining their export-driven economies. Analysts say countries such as Thailand and the Philippines will find it difficult to convince China to let its closely controlled yuan rise more freely, a move they hope would relieve some of the upward pressure on their currencies, which have been driven higher in recent months by a surge of global investment flows away from dollar-denominated assets. The most Southeast Asia might hope for is that Beijing continues its policy of gradually allowing the yuan to appreciate-a process the U.S., among others, is eager for China to accelerate. "The chances of China going for a one-off revaluation are small at this point," says Song Seng Wun, an economist with CIMB Research in Singapore. "Instead, the gradual approach will continue-sometimes slower and sometimes faster, depending on the political calendar in Washington." The Asia-focused trade and security summit-which starts Friday with the 10-member Association of Southeast Asian Nations before opening up to include key trade partners China, Japan, South Korea, India, Australia and New Zealand along with delegations from Russia and the U.S.-is also likely to wrangle over how to deal with planned Nov. 7 elections in Myanmar, which are now the subject of deepening international concern. Myanmar, which is also known as Burma, describes the country's first vote in 20 years as part of a "roadmap to democracy" aimed at expanding public participation in government. But critics, including the U.S. government, have said they doubt the vote will be free and fair due to tight restrictions on the media and public campaigning, among other problems. Many exiles and analysts have derided the election as a sham designed to bolster the ruling junta's grip on power, and have called on Myanmar to release more than 2,000 political prisoners-including famed dissident Aung San Suu Kyi, long in house arrest-before the vote can be taken seriously. Speculation has been increasing that Myanmar might release Ms. Suu Kyi soon after the vote. Myanmar officials declined to confirm the speculation but did not contest assertions that her current term under house arrest expires Nov. 13, the Associated Press reported, citing an Indonesian diplomat. Even if she is released, it is not clear whether she would be allowed to resume political activities, or if her release would be permanent. While some Southeast Asian nations, along with China and India, have mostly taken a soft line toward Myanmar, gently chiding the regime for its alleged human-rights abuses or other issues, some leaders worry Myanmar's pariah reputation might handicap efforts to market Southeast Asia as a trade and investment alternative to China, where labor costs are quickly rising. Philippine Foreign Secretary Alberto Romulo recently called the vote a "farce." Asean's influence over the country remains limited, though, thanks in part to Myanmar's booming sales of natural gas and other commodities which enable it to find willing trade partners elsewhere. "There's not much anyone can do to bring an end to the regime," so some Southeast Asian leaders may feel they're better off focusing on other issues, says Christopher Roberts, a senior lecturer at Australia's University of Canberra. Regional financial markets will be keeping a close eye on the degree to which the Southeast Asian countries will press China to let the yuan rise more quickly. The Asean nations are at the heart of an expanding trade bloc in a region which the U.S. and others are also trying to tap into via new free-trade agreement proposals such as the Washington-based Trans-Pacific Partnership. But it is unclear how far Southeast Asia is willing to pressure China-or whether China will pay much attention. "I think the pressure on China from other Asian emerging markets will increase and there will be noise," says Prakriti Sofat, a Singapore-based economist with Barclays Capital. "But whether China will act on this is an entirely different ball game." A report by the International Monetary Fund, released Thursday, singled out China as contributing to exchange-rate misalignments by keeping the yuan "substantially undervalued." The report said, "There is an urgent need for multilateral policy coordination and agreement on key issues related to rebalancing and exchange rates." The leaders of Thailand and the Philippines met Thursday amid preparations for the broader meeting, with Thai Prime Minister Abhisit Vejjajiva suggesting that Asean central bankers and finance ministers take a more coordinated approach on how the region deals with strengthening currencies. Thailand's baht, for instance, has risen more than 11% against the dollar this year. Analysts say the Asean nations won't want to rock the boat with China too much. "We aren't as aggressive as some in the European Union or in the corridors of power in Washington," says CIMB's Mr. Song. He says he suspects Southeast Asian countries would rather keep on good terms with China given increasing trade flows within the region. Southeast Asia's economies might not get very far even if they do attempt a full press. The U.S. continues to be frustrated by the slow appreciation of the yuan, while finance ministers from the world's leading industrialized nations stopped short of setting targets for their current-account balances when they met in South Korea last week. The U.S. and other countries with deficits in their current accounts-the broadest measure of a country's trade and investment balances-have backed the idea of targets as a way of measuring progress toward rebalancing the world economy so that it is less dependent on U.S. consumers. But countries with surpluses, such as China, are wary of committing themselves to specific targets because it might push up the value of their currencies to an uncomfortable level that might harm exports and hurt growth. -Tom Barkley contributed to this article. Write to James Hookway at [email protected] [Non-text portions of this message have been removed] ------------------------------------ Post message: [email protected] Subscribe : [email protected] Unsubscribe : [email protected] List owner : [email protected] Homepage : http://proletar.8m.com/Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/proletar/ <*> Your email settings: Individual Email | Traditional <*> To change settings online go to: http://groups.yahoo.com/group/proletar/join (Yahoo! ID required) <*> To change settings via email: [email protected] [email protected] <*> To unsubscribe from this group, send an email to: [email protected] <*> Your use of Yahoo! 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