IMF not worried about exchange rates in Indonesia, Philippines

Hanoi (VNA) – The International Monetary Fund is not too concerned over recent pressure on exchange rates in Indonesia and the Philippines as it is not triggered by domestic factors and Asia has stronger reserves than in the past, an IMF official said on May 9.

The Philippine peso (PHP), Indonesian rupiah (IDR) and Indian rupee (INR) have lost 5 – 6 percent from their peaks this year as the three countries are seen to be the most vulnerable to external factors compared to major Asian economies because of their current account deficits, the Reuters reported.

They have faced double challenges in recent weeks, following the United State 10-year bond yields reaching 3 percent, raising worries about capital outflows; and oil prices hitting 3.5-year high, increasing import costs.

But Changyong Rhee, director of the IMF’s Asia-Pacific department, said that the currencies’ weakness was a “natural adjustment” and people should not panic as the trio had more room for maneuver than during the Asian financial crisis in 1997.

The pressure on exchange rates mostly stemmed from tighter global financing conditions rather than domestic factors, Rhee noted.

In its economic outlook update, the IMF said growth prospects in Asia remain strong, but the region is vulnerable to sudden tightening in global financial conditions and trade protectionism policies.

It forecast Asia to grow 5.6 percent in 2018 and the next year, up 0.1 percentage point from its previous update in October last year and accounting for about two-thirds of global growth.-VNA