Southeast Asia faces more currency risk, says World Bank

(Oct 5): Malaysia, and to a lesser degree Indonesia, Thailand and the Philippines, remain more exposed to exchange rate risk than other developing economies in East Asia and the Pacific as global financial conditions tighten, the World Bank said.

Companies and banks in these countries have sizable external debt, although foreign exchange reserves currently appear adequate, the Washington-based multilateral lender said in a report on Wednesday.

Other key details of the report:

• Monetary authorities need to be prepared to tighten their policy stance if capital outflows prompt currency weakness
• In the case of depreciation pressures in China, authorities should allow greater adjustment through relative prices and closely monitor financial sector vulnerabilities as monetary policy further tightens

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