A meeting has been planned for the finance members of many Asian countries to work together to build a community foreign reserve pool, which would stop further the currency devaluation of many Asian countries hardest hit by the global slowdown. Thirteen countries will be represented, including Japan and China, which hope to compile at least $120 billion of foreign currency reserves to prop up prices.
Many labor-dependent economies are facing huge slowdowns as developed nations of the world are buying less consumer goods amid a global slowdown. Nearly $700 billion has been either pledged or already released in an effort to stimulate the economy, with $586 billion coming from China alone. Many countries are spending money to improve infrastructure to help them regain the control of foreign exports when the economy turns around for the better.
Learning from history
The ideology behind the pool is to influence the value of Asian currencies to prevent another meltdown similar to the 1997 Asian crisis. During that time, Indonesia, Thailand and South Korea were hardest hit when speculative money poured out of the countries and into short currency bets. During that time, many speculators cashed in, including famed Forex investor George Soros, who amassed fortunes as the Asian economies collapsed.
The finance ministers representing the nations do not expect the foreign currency reserves need to be tapped, but have created a safety net just in case. The IMF announced that Asia will grow at the slowest pace since 1998 at a rate of 5.5% in 2009. Asian industrial growth will still out-pace that of the rest of the world, which is expected to grow at just 2.2% as per the IMF. Originally, the league of nations expected to create a fund of just $80 billion, but as the recession deepens, more money may be necessary as a safeguard against collapse.