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The Dollar rises against most majors as China say the currency may still dominat

Mon, Jun 29 2009, 10:33 GMT
by Benny Menashe

Finotec Group Inc.

The greenback gain slightly against the euro after China said that the U.S. currency may keep dominating global trade and it won’t alter its foreign currency reserves suddenly or without notice. The dollar rose versus all 16 major currencies after Guan Tao deputy head of the international payment department at the State Administration of Foreign Exchange, wrote in Chinamoney Magazine that the greenback may maintain its status as the world’s reserve currency. “The dollar will keep its role as reserve currency,” said Koji Fukaya, a senior currency strategist at the Tokyo unit of Deutsche Bank AG, the world’s biggest foreign-exchange trader. “China is unlikely to change the composition of its foreign- currency reserves any time soon. That’s dollar positive.” The EUR/USD is currently trading at $1.4020 as of 8:58am, London Time.

The euro and the greenback gained against the Swiss franc on Thursday as traders remained jittery about possible intervention by the Swiss National Bank to weaken its domestic currency. The dollar was underpinned after the Federal Reserve did not expand its programme of buying government and mortgage debt and said at the conclusion of its policy setting meeting on Wednesday it saw signs the deep U.S. recession was easing. Traders/investors cited talk of the SNB selling francs for euros and dollars, possibly via the Bank for International Settlements, but both the SNB and BIS declined to comment. "In the wake of yesterday, people were always going to be nervous and we're in thinner summer markets and that always leaves potential for rumours or nerves to afflict markets," said Jeremy Stretch, strategist at Rabobank in London. The USD/CHF is currently trading at 1.0880 as of 9:15am, London Time.

Sterling rose on Friday, supported by broad weakness in the dollar, while a modification in the Bank of England's asset-buying programme also helped to boost demand for the UK currency. Helping the pound was a fall in the dollar, which was stung as optimism that the global financial and economic crisis is moderating eroded the U.S. currency's safe-haven appeal. "Any ending of QE is not necessarily good for the currency, it depends on the process thereafter," said Paul Mackel, director of currency strategy at HSBC in London. The GBP/USD is currently trading at $1.6540 as of 9:19am, London Time.

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Published on  Mon, Jun 29 2009, 10:37 GMT