China calls on Asian neighbors to strengthen ties as Fed tapering looms
According to a Reuters report, emerging market economies had seen foreign investors withdrawing funds as the possibility of the Federal Reserve's tapering became more imminent.
China's Deputy Central Bank Governor Yi Gang called on its Asian neighbors to strengthen their financial ties with China to prepare for the US Federal Reserve's planned tapering of its monetary stimulus program. Market speculation was rife that the US central bank would start to decrease its bond purchases this month. The Federal Reserve was scheduled to meet on September 17 to 18, and an announcement would be expected then.
Yi also called on the countries to encourage the flow of capital through currency swap deals. Countries like Indonesia, Malaysia and Thailand already inked currency swap agreements with China. In a statement published in China's central bank website, Yi said, "Expectations that developed economies may start to exit quantitative easing policies have stirred financial markets in emerging countries, which requires our join efforts to handle."