World Bank predicts Asian currencies appreciation

Singapore, Nov 25: World Bank warned the of a negative impact in the slow economic recovery of US and Europe due to quick raise in interest rates which could led to appreciation of Asian currencies.

World Bank President Robert Zoellick was quoted as saying, " Tightening interest rates too abruptly, especially where recoveries are weak, such as in the U.S. and Europe could trigger another downturn."

Noticing the raise in interest rates in Australia's central bank, Zoellick said that the Asian countries too may be forced to raise its interest which will effect the export rates.

"But raising rates while the Fed keeps its rates close to zero would cause Asian currencies to appreciate. This would make their exports more expensive and decrease overseas sales, hurting recoveries based on exports."

He said that China's renmindi is connected to declinining US dollars which could make it a strong competitor as the products will be much cheaper than other Asian countries.

OneIndia News