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Govt must ensure stable currencies: Mahathir

Our Bureau

NEW DELHI, Oct. 17

DEVELOPING countries need to find ways to maintain currency stability rather than allowing themselves to be "freely tossed around" by currency traders who are always in search of profits, according to the visiting Malaysian Prime Minister, Dr Mahathir Bin Mohamad.

At a special session of the first-ever ASEAN-India Business Summit here, he pointed out that the current international financial system had provided ample scope for countries to go the `Argentina way' as the currency of a country can be easily devalued through "short selling".

"Markets are about making profits. They are not interested in the welfare of the people in the country. It's the Government which has to ensure that its currencies are stable", he said.

At the same time, he held that mere "fixed rates" do not bring the desired stability. "In Malaysia, we had gone in for a fixed rate system. We did not stop with this. We also micro-managed the economy during the period of crisis with active Government intervention in different sectors," Dr Mahathir said.

In his address, the Malaysian Prime Minister made a case for countries to adopt "prosper thy neighbour" policies. "In many parts of the world, beggar thy neighbour is a powerful reality, a natural policy response. We, in East Asia, have found much value in prosper thy neighbour policies. So many countries in East Asia have willy-nilly adopted this policy not because of altruism or idealism, but because it has served their own national interests. I assure you that the returns are worth all the difficulty", he said.

Dr Mahathir said that it was "high time" that India and ASEAN work on a comprehensive economic partnership that would be mutually beneficial to "us and to the rest of Asia and the world".

He also held that there was a "profound economic logic" in India concluding an Economic Partnership Agreement with ASEAN. "It would be interesting to see here, in India, how strong the interest is in an ASEAN-India Economic Partnership Agreement," Dr Mahathir said.

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