By Yoko Nishikawa

TOKYO, Feb 19 (Reuters) - Asian nations should cooperate on foreign exchange rates and create a joint scheme aimed at preventing the onset of a currency devaluation race and big currency moves, the head of the the Asian Development Bank said on Thursday.

ADB President Haruhiko Kuroda also said Asia should make its regional currency swap network, called the Chiang Mai Initiative, more effective, including raising the size of swaps that could be withdrawn without using IMF-mandated reform programmes.

"Policy coordination on foreign exchange rates is becoming more important," Kuroda told a news conference in Tokyo.

"For the time being, it will be useful to create a mechanism to keep each country from rushing to compete in a currency devaluation race or check on large fluctuations in the regional currencies against each other."

Kuroda said he was not just talking about monitoring currency moves together. Rather, he saw the need for Asia countries to seek cooperation to set up a structure where Asian currencies can move smoothly and jointly against the dollar or the euro.

He noted that while the yen had appreciated against the dollar last year, other Asian currencies fell.

But when the global financial crisis calms down, Asian nations will likely attract capital inflows again as investors see the potential for their economies to grow, and that can cause upward pressure on their currencies, he added.

"In that case, it would be desirable for Asian nations to have an arrangement to have regional currencies float up together, rather than going against market pressure," he said.