Washington’s pressure on China to adjust its exchange rate could destabilise Asia, the governor of the Malaysian central bank warned on Wednesday.

Zeti Akhtar Aziz said global imbalances built up over the past 10 years could not be rectified in the space of a few months. The US has run up a huge current account deficit while Asian economies are mostly in surplus.

“If the US puts pressure on China to readjust its exchange rate too much …it could lead to destabilising consequences for Asian economies …You cannot expect the unwinding of global imbalances in the short term,” she told the FT.

Ms Zeti fears that if the renminbi quickly appreciated against the dollar it would reduce Chinese demand for goods from other Asian countries, which rely heavily on exports to the region’s biggest economy.

The new US administration has stepped up pressure on Beijing to let its currency appreciate to make US exports more competitive, thereby boosting growth. Measured against the dollar, the renminbi gained about 20 per cent in the three years following its revaluation in July 2005. It has been treading water against the dollar since then.

Ms Zeti said most Asian economies were in good shape to cope with the global financial crisis because they had built up foreign currency reserves and were not heavily indebted. Unlike countries in eastern Europe, which have turned to the International Monetary Fund for financial support, most Asian economies do not need to raise money.

“We are not so vulnerable, in that we expect to have surpluses going into this year and next,” she said.

Ms Zeti admitted, however, that Malaysia and other small Asian countries would suffer this year as exports plunged. The latest IMF forecast shows output among newly industrialised Asian countries contracting by 3.9 per cent this year. In Malaysia, exports fell 14.9 per cent in December, a big setback as exports are worth 100 per cent of gross domestic product.

This week Malaysia cut its key interest rate for a third time, by half a point to 2 per cent. The reduction is the latest sign of concern that the country may slip into recession. Ms Zeti said growth this year was expected to be flat.

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