China and its Asian neighbors should strengthen financial ties to head off risks stemming from any U.S. tapering of its stimulus program, China's deputy central bank governor, Yi Gang, said on Wednesday.
Yi's comments came as market speculation builds that the U.S. Federal Reserve may start tapering its stimulus program as early as this month. The next Fed policy meeting is set for Sept. 17-18.
"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," Yi said in a statement published on the central bank's website.
He made the remarks at a China-ASEAN financial forum held in southern China.
He called on China and ASEAN countries to broaden the use of regional currencies in bilateral trade and investment settlements and close more currency swap deals to facilitate capital flows.
China has signed bilateral currency swap agreements with several countries in ASEAN, such as Indonesia, Thailand and Malaysia.
Financial markets and currencies in many emerging economies have been rocked for weeks by heavy selling as foreign investors withdraw funds in anticipation of tapering by the Federal Reserve. The Fed's aggressive stimulus program saw cheap cash flood into emerging markets in search of higher returns.
India's rupee has hit successive record lows and Indonesia's rupiah is at its weakest levels since the depths of the global financial crisis in 2009. Several ASEAN stock markets have sunk into bear market territory.
China's stock markets sold off heavily in late May and June but have gradually been recovering on signs that its economy is regaining traction. The yuan is the only Asian currency to have gained against the U.S. dollar so far this year.
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