The continuing financial crisis in the Far East could soon start to hit European exporters, according to a leading credit insurance company.

Cardiff-based NCM Credit Insurance said a combination of currency and debt woes and an expected slowdown in demand from the region was increasing the number of overdue debts and requests for credit term extensions.

It added that while the full extent of the crisis had not yet become clear, there had been a fall in the number of companies able to meet trade debts.

NCM insures exporters against the risk of non-payment by buyers.

Goi Ashmore, a senior economist at NCM, said: "Devaluations and depreciations of the Asian currencies will seriously affect the cost of repayments.

"This can clearly be seen in countries like South Korea and Indonesia where the fall in the value of the rupiah makes repayment of trade debt at least two and half times more expensive for companies without hard currency liquid assets."

He said there would be late payments and that companies would collapse with unprotected exporters feeling "some pain" in the near future, if not already.

He added: "There is little doubt that current exchange rates have fallen to unrealistically low levels.

"However international financing packages are far from complete, and the actions of some governments are keeping the confidence of investors and speculators at levels that do not support a bounce-back of currencies in the short-term."

NCM, which each year insures £30bn of UK trade against the risk of non-payment, said it was continuing to underwrite companies in Asian markets.

But it said it was adjusting prices as the risk of businesses going bankrupt or failing to meet payments increased.

Back to top | BBC News Home | BBC Homepage	©