ND:Dollar Hits Highest Level Vs Yuan Since Dec Before G-20
By Tatsuo Ito
TOKYO--The dollar was higher against the yen in Asia on Friday, with the greenback hitting a three-month high against the Chinese yuan ahead of the Group of 20 meeting in Sydney this weekend.
Receded concerns about the health of the U.S. economy also buoyed share prices and risk sentiment, after weakness in a key gauge of Chinese manufacturing on Thursday dragged down shares and strengthened the yen.
Some noted speculative trade related to the G20 meeting pushed the dollar up sharply against the Chinese currency.
"Overseas players who had bought the yuan on speculation that China won't be able to intervene in the currency market before the G-20 meeting appear to be forced to unwind those positions, sending the dollar higher," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo.
"Those players were caught off guard as China appears to be in the market to buy the dollars," he said.
Mr. Saito said remarks by U.S. Treasury Secretary Jack Lew have raised the view that the U.S. and China might have agreed behind the scenes that Washington allows Beijing to intervene in the currency market in exchange for a reform in the shadow banking sector. Mr. Lew on Thursday China can manage its shadow banking risks and the banking sector risks don't threaten the global economy.
At 0550 GMT, the dollar was at Y102.55 against Y102.35 in late New York on Thursday. Meanwhile, the dollar rose as much as CNY6.0930, the highest since December 2013. It was at CNY6.0835 in early Asian trade.
At the G-20 meeting, policy makers are likely to discuss a recent turbulence in emerging markets triggered by the Federal Reserve's reduction of its monthly bond purchases from January. But traders here are not convinced that the meeting will yield something that will set a clear direction for the currency market next week.
"I don't think the meeting will produce any concerted policy actions," said Toshihiko Sakai, a senior FX manager at Mitsubishi UFJ Trust Bank.
While emerging economies are likely to urge the U.S. to wind down its stimulus carefully by taking into account the effects on emerging countries, advanced economies are likely to expect some of emerging nations to proceed with a steady reform to address their chronic trade and budget deficit, he added.
Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT
