By Jane Rickards in Taipei

The policy debate over Asian currency management has been long, tortuous and often very sensitive. But that’s not deterred Taiwan’s central bank governor from joining in with a fresh call for the region to set up a formal exchange rate coordination mechanism.

By promoting stable exchange rates, Perng Fai-nan, the governor, said that such a mechanism would help avoid the economic instability caused by sudden inflows of foreign capital, which can inflate asset price bubbles and stifle the competitiveness of exporters.

Those are concerns shared by other Asian governments, but the political and economic paths to progress are fraught – not least because China is unlikely to support any venture that it cannot shape. Continue reading »