Japan calls for study on flexible currencies in developing Asia

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May 5: Japan’s finance minister Sadakazu Tanigaki called for a study on flexible exchange rates in Asia’s developing countries amid rising pressure from the US for China to relax its currency’s peg to the dollar.

“I believe it desirable that study toward more flexibility in exchange rates be made for developing member countries that lack such flexibility in order to ease adjustments to economic shocks,’’ Tanigaki said in the text of a speech prepared for delivery on Thursday at a meeting of Asian finance ministers in Istanbul. He didn’t name any countries.

The US says the Chinese yuan is undervalued and gives exports to the world’s largest economy an unfair advantage. Southeast Asian Finance Ministers gathered in Turkey for the annual meeting of the Asian Development Bank have declined to comment on a possible revaluation of the yuan and any effect it might have on their economies or say whether China should revalue.

Tanigaki said on May 3 that he and his Chinese and South Korean counterparts discussed the yuan “frankly’’ during a meeting that day, without giving details.

The Japanese yen and other Asian currencies have been rising amid speculation that a more flexible Chinese exchange rate system may be imminent. The yen, which has advanced 1.6% in give days, was at 104.46 to the dollar at 8:16 a.m. in London from 104.56 late yesterday in New York.

China’s Finance Minister Jin Renqing, also in Istanbul, said too much speculation on a possible revaluation hinders the process of changing the peg.

“When there’s too much speculation, this makes it difficult to implement reform of the exchange-rate regime,’’ he said at a press briefing on Wednesday.

Tanigaki also said while the Asia-Pacific region will be a “key engine’’ for global growth, high oil prices and future economic trends in China are “risk factors’’ for Asian economies. Crude oil has risen 27% in the past year. Crude oil rose for a second day in New York on speculation producers may not be able to meet peak demand later this year.

China’s economy expanded 9.5% in the first three months of the year, more than economists expected, adding to expectations the government may have to raise rates or impose additional lending restrictions to curb growth.