02 Jul 2009
July 2 (Bloomberg) -- Asian currencies surrendered initial gains after a China official said he was "not aware" of a plan to discuss the dollar's replacement as the global reserve currency at a Group of Eight summit next week.
The Malaysian ringgit and Philippine peso earlier reached two-week highs as evidence a global recession was easing spurred demand for emerging-market assets. The dollar advanced against 13 of the world's 16 most-used currencies after Chinese Vice Foreign Minister He Yafei said he hopes the greenback will "remain stable." Taiwan's dollar and South Korea's won were little changed after rallying in the last two days.
The market got "ahead of itself with the idea that the dollar's role as the reserve currency is weakening," said Suresh Kumar Ramanathan, a currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. "The upbeat tone in the currency market will likely play out in the second half."
Indonesia's rupiah rose as much as 1 percent to 10,130 per dollar before trading at 10,190 as of 11:14 a.m. in Jakarta, from 10,230 late yesterday, according to data compiled by Bloomberg. The ringgit advanced 0.1 percent to 3.5160, earlier gaining as much as 0.4 percent, and the peso also rose 0.1 percent to 48.055.
China isn't aware of a plan to discuss a new reserve currency at the G-8 Summit in Italy next week, He told reporters in Beijing today. China asked to debate the idea at the summit, Reuters reported on its Web site, citing unidentified sources.
Dollar Rebound
The dollar rose 0.2 percent to $1.4109 per euro, having yesterday in New York reached a three-week low of $1.4201. It also traded at 96.61 yen, up from today's low of 96.38.
Korea's currency earlier strengthened as much as 0.8 percent to 1,257.30 as regional stocks rallied on signs recessions in the U.S. and Japan, the world's two largest economies, are abating. It recently traded at 1,267.10, little changed from yesterday's close of 1,267.65.
The U.S. Institute for Supply Management said its factory index rose in June for a sixth straight month to 44.8. The reading was still less than 50, signaling contraction. The Nikkei newspaper said the Bank of Japan will keep its forecast for a moderate recovery in the second half ending March 31.
There's "increased willingness to take emerging Asian currency positions," said David Cohen, an economist with Action Economics in Singapore. "There's the growing sense that the global economy is firming and exporters such as Taiwan and Korea will benefit."
Remittance Optimism
The peso reached its strongest level since June 15 on speculation overseas workers will send more funds home this year. The central bank said its projection for remittances to be little changed this year is "turning out to be relatively conservative."
"Any growth in remittances, even if it is minimal, will still add to the supply of dollars," said Ed Garcia, a currency trader at East West Banking Corp. in Manila.
Elsewhere, the Singapore dollar was little changed at S$1.4467 against the greenback, from S$1.4474 late yesterday, and Thailand's baht traded at 34.04 versus 34.06 yesterday. The Chinese yuan was at 6.8322, from yesterday's close of 6.8331.
