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2009-10-09 Economy
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Asia steps in to support dollar
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 Asian central banks intervened heavily in the currency markets on Thursday to stem the appreciation of their currencies against the US dollar amid fears that their exports could be losing ground against China. The mainly south-east Asian countries have been spurred to defend the competitiveness of their currencies by Chinas decision to in effect re-peg the renminbi to the dollar since July last year.
Simon Derrick, at Bank of New York Mellon in London, said: Other Asian central banks outside China are naturally looking to aggressively defend their competitive edge against undesirable currency strength as the dollar weakens.
After allowing the renminbi to appreciate by about 20 per against the US dollar from mid-2005, Beijing re-pegged its currency to the greenback when export growth contracted.
The greenback hit one-year lows against a raft of regional currencies. The dollar index, which tracks its value against a basket of six main currencies, hit a 14-month low in afternoon trading in New York.
Jean-Claude Trichet, European Central Bank president, issued a warning about the euros strength on Thursday and said that authorities on both sides of the Atlantic would co-operate as appropriate.
Marco Annunziata, chief economist at Unicredit, said: He clearly tried to signal as convincingly as possible that the eurozone and the US are united in the desire to limit the rise in the euro versus the dollar but the market is calling his bluff.
Gold prices hit an all-time high for the third day in a row, on the dollars weakness. Base metals such as aluminium and copper jumped 4 per cent, while crude oil surged almost $3 to more than $70 a barrel.
The central banks identified by traders as substantial buyers of US dollars included Thailand, Malaysia and Taiwan. Hong Kong and Singapore, which both have managed currency regimes, were also buyers.
The moves to limit Asian currency appreciation is ammunition for those who warn that the new Group of 20 framework for strong and balanced growth is toothless. Less than a week after the worlds finance ministers and central bankers agreed to foster more balanced world economic growth in Istanbul, Asian officials have intervened to prevent exchange rates playing their part in the process.
However, traders said that the central bank interventions appeared to be aimed at controlling the pace at which the US dollar declines rather than solely to stop Asian currencies appreciating.
The Obama administration has not altered its refrain that it believes in a strong dollar but is seen as unlikely to intervene in currency markets, particularly as the US Treasury recognises the trade-weighted value is similar to where it was two years ago. 
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Posted by Steve White 2009-10-09 00:00||
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Posted by phil_b 2009-10-09 03:06||
2009-10-09 03:06||
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Posted by Scooter McGruder 2009-10-09 05:02||
2009-10-09 05:02||
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Posted by g(r)omgoru 2009-10-09 05:06||
2009-10-09 05:06||
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Posted by Scooter McGruder 2009-10-09 05:37||
2009-10-09 05:37||
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Posted by Procopius2k 2009-10-09 07:03||
2009-10-09 07:03||
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Posted by ed 2009-10-09 07:16||
2009-10-09 07:16||
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Posted by Richard of Oregon 2009-10-09 13:47||
2009-10-09 13:47||
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