Faced with rocketing exchange rates that risk destabilizing their economies, leaders of the Association of Southeast Asian Nations (ASEAN) called on Thursday for more cooperation to calm currency tensions.

With the Thai baht gaining over 11 percent and the Philippine peso up 7 percent against the dollar, the leaders of the two countries discussed their concerns on the sidelines of the ASEAN summit in Hanoi, the capital of Vietnam.

"The agreement with Thailand's Prime Minister Abhisit was that central bankers and finance ministers talk a little bit more frequently because right now the action have been taken on an individual rather than a coordinated basis," a spokesman for the Philippine President Aquino said.

The exchange rate issue comes at a time when Southeast Asian economies are worried about the possibilities of getting sandwiched by a currency war between China and the United States.

Capital inflows are pushing Asian currencies higher still and have led to steep gains in stocks and property prices, fuelling fears of inflation and speculative bubbles.

Pressure on Myanmar to release Aung San Su Kyi

The leaders also worked on ambitious plans for political and economic union by 2015. However, analysts say that transforming the bloc of 580 million people into a political, economic and security community is easier said than done.

Moreover, political divisions over Myanmar and its poor human rights record continue to exist. The Philippines has described the Myanmar election that is due on Nov. 7 and will be held with pro-democracy leader Aung San Suu Kyi under house arrest, as a "farce".

ASEAN Secretary-General Surin Pitsuwan said on Thursday that Myanmar had raised the prospect of Suu Kyi's release from house arrest after the polls but added that "for that we have to wait. It was not a clear-cut commitment."

Economic talks between China, Japan and South Korea cancelled

On Saturday, the ASEAN summit will widen into a 16-nation East Asia Summit, taking in Australia, China, India, Japan, South Korea and New Zealand too.

Two-way talks between Chinese Premier Wen Jiabao and his Japanese counterpart Naoto Kan that had been expected to take place on the sidelines are now in doubt.

A meeting between the economic ministers of Japan, China and South Korea that was scheduled for Friday and was supposed to discuss China's rare earth export restrictions has already been cancelled. China’s foreign ministry blamed a scheduling conflict.

US Secretary of State Hillary Clinton will be attending the East Asia summit on Saturday. She has said she plans to question Chinese officials in Hanoi about the issue. She also said the US and other countries would have to look for additional sources even if trade does resume.

Author: Miao Tian / Reuters / AFP
Editor: Anne Thomas