'Currency appreciation, 'hot money' among risks facing emerging Asia'

---

SAN FRANCISCO, Sept 8 (Xinhua): The governor of Thailand's central bank said Thursday that the rapid appreciation of domestic currencies and international "hot money" are among the risks facing Asia's emerging economies in the near future.
Tarisa Watanagase, the first woman governor of the Bank of Thailand in its 64 years' history, told a gathering of Asian and US financial experts here that emerging Asian economies need to build modern monetary policy frameworks to prevent future financial crises like the one that hit the region 10 years ago.
A decade after the 1997 crisis, emerging Asia is vibrant and looks less vulnerable to financial disturbance, but there is tension to be managed in the short-term, Watanagase said at a conference sponsored by the US Federal Reserve Bank of San Francisco on the 10th anniversary of the Asia Financial Crisis.
"When our markets and institutions are still developing, the struggle between financial integration and financial stability ... requires a deft balancing act," she said.
Over 100 senior banking officials, policymakers and financial consultants were attending the two-day conference to analyse the regional financial crisis, triggered by the collapse of the Thai currency, the Baht, in July 1997, and discuss ways to prevent financial market disturbances in the future.
Asian economies and policymakers have come a long way in their attitudes toward macroeconomic risk management since 1997, and countries have taken unilateral action to promote economic and financial resiliency.
Policy changes and risk awareness make financial market disturbances less likely to trigger remarkable real economic outcomes, but it may be a slight overstatement that Asia as a whole has become resilient to shocks and disturbances today, Watanagase said.
She said the pressing and practical challenges emerging Asia faces in the short-term include the so-called "hot money," or large capital inflows seeking quick profits, pressure for rapid domestic currency appreciation and the potential loss of monetary autonomy in the sense of independent interest rate policies.
The priority is the need to develop a system that allows for constant self-correction, one that also lets the economy regain its strength quickly after a severe negative shock, said the Thai central bank governor.
She called on western countries to help Asian countries achieve the goal, as they have economic, if not strategic, interests in the success of emerging Asian markets.
Participants at the conference were expected to discuss key issues raised by the Asian financial crisis, including transparency, governance, weakness in the financial sectors and the role of government policy.
Earlier in Washington, US Federal Reserve Governor Randall Kroszner told the conference via video link that governments should pay more attention to the health of banking systems, because banking crises could have a broader impact on the real economy.