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It’s all just a drop in the ocean

Still convinced that their ailing currencies are sick because of the attentions of speculators, Asean finance ministers have agreed a fund for mutual defence through forex market intervention. Most bankers reckon the $1 billion put in the pot is a derisory amount to cope with what is anyway a misdiagnosed condition. Beyond that there’s disagreement on whether Asean currencies have bottomed out or have further to fall.

Singapore: stands out from the general
gloom about southeast Asian economies

With the region's currencies crashing down around them early last month, the finance ministers of the 10 member states of the Association of Southeast Asian Nations (Asean) sat in a room in Kuala Lumpur, Malaysia, that must have seemed more like a bunker. They asked themselves, as their currencies fell, how it all seemed to be going horribly wrong - again. After all they were still making the right noises about reform. How could they have been found out so quickly? The truth is, investors haven't believed the spiel for some time.

The fact that many of the region's economies had seemingly recovered so dramatically had led to complacency. It meant that they didn't bother to finish the prescribed course of antibiotics. And unlike the last time their currencies dropped to similar levels, the US economy is not going to pull them out of the quagmire quite so rapidly.

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