Malaysian central banker addresses forex market

Speaking at the 22nd ACI Asia Pacific Congress in Kuala Lumpur on November 1, Zeti told dealers the East Asian region would see greater intra-regional trade. More exports to China would be key -- exports from East Asia to China have doubled over the past decade to total 10% of the region’s exports, she said.

However, she added that despite common features the region shares -- there remain important differences between the economies of East Asia, including diverse natural resources, and differing stages of financial markets development.

In addition to growing intra-regional trade, Zeti added that the growing importance of domestic demand in the regional economies would continue, supported by domestic-orientated policies in East Asia.

Zeti also told financial markets participants that financial reporting irregularities, the weakening of the corporate sector and structural imbalances in some of the advanced economies have resulted in unstable and highly volatile conditions in the currency and asset markets.

Referring to a "new wave of international crises", Zeti said, so far "contagion has been contained". But with "highly volatile financial flows, and uncertainty in financial markets, the potential for contagion remains".

Many economies in the region are still struggling to recover from the devastation caused in the region by the 1997--98 financial crises. Fears remain that the terrorist attacks in Bali on October 12 will further damage that recovery.

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