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UPDATE 1-Geithner says capital inflows to Asia reasonable

Published 11/10/2010, 06:04 PM
Updated 11/10/2010, 06:08 PM

* Says Asia needs to let currencies rise further

* Reiterates US is committed to keeping markets open

(Adds details)

SINGAPORE, Nov 11 (Reuters) - The wave of money streaming into Asia is "reasonable" and the region is in a much better position to manage the inflows than previously, U.S. Treasury Secretary Timothy Geithner said.

In an interview with Singapore's Straits Times newspaper, Geithner also called on Asian countries to let their currencies strengthen further to reduce the risk of higher inflation and asset bubbles.

The influx of liquidity "seems to me reasonable; it's rational, not surprising, and fundamentally desirable compared to the alternative", he said.

"These are easier risks to manage than any of the risks we faced as a global economy together over the last two-and-a-half years of crisis," the newspaper quoted him as saying.

Geithner, who was in Singapore on Wednesday enroute to a G20 leaders' meeting in Seoul, said the United States' objective during the meeting was to sustain momentum on financial reform and underscore its commitment to keep markets open.

The interview carried no reference to the Federal Reserve's "quantitative easing", which Asian governments say is weakening the dollar and stoking capital inflows and inflation in emerging markets.

Leaders of the Group of 20 rich and developing countries will begin a two-day meeting in Seoul on Thursday in a bid to resolve differences over economic policies but they remain far apart from agreeing on a common stance.

A G20 spokesman said discussions by G20 deputies in Seoul ahead of the leaders' meeting got so hot that the door to the negotiating room had to be left open.

(Reporting by Kevin Lim; Editing by Raju Gopalakrishnan)

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