China temporarily raised reserve requirements for six large commercial banks, a surprise move aimed at draining cash from the economy.
Thailand, also on edge about a rapidly rising currency that has alarmed exporters, said it may impose a tax on foreigners’ bond purchases.
With interest rates in the developed world at record lows, investors have poured money into higher-yielding emerging market assets, driving up local currencies in the process.
Governments, afraid that rising exchange rates will hurt exports and stunt economic growth, have tried to limit currency appreciation, sparking fears of a “race to the bottom” that may trigger trade tariffs and a sharp decline in global growth.
“If each country insists on its own interest during the recovery phase, it will bring about trade protectionism,” South Korean President Lee Myung-bak said.
World finance leaders made no headway on currency disputes at a weekend International Monetary Fund meeting, and Lee urged an agreement before his country hosts a G20 summit next month.
But China’s central bank governor said it will take time to correct the uneven pattern of global growth that has contributed to exchange rate tensions, warning that attempts at a quick fix could create more problems.
“People may not have that kind of patience, so they would like to see a quick change in the balance, but it may cause a kind of overshooting,” Zhou Xiaochuan said
US and European officials say that limiting emerging market currency gains is the main cause of imbalances.