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ADB chief sees resilient US dollar this year

By Staff
Google Oneindia News

CEBU, Philippines Jan 13 (Reuters) The president of the Asian Development Bank said on Saturday he did not expect the dollar to fall this year due to healthy U.S. economic growth of 2.5 percent or more from 2006.

''Given the strong, continued economic growth in the United States, given very stable, resilient financial markets in the U.S., I do not see an imminent dollar fall,'' Haruhiko Kuroda told reporters on the sidelines of a regional summit in the Philippines.

''I do not expect a dollar fall this year. Of course, they have a large current account deficit and the dollar may eventually fall vis-a-vis non-dollar currencies.'' Markets had expected the greenback to lose ground over the next six months but a string of surprisingly strong fourth-quarter U.S. economic reports pushed it to 1 month highs against the euro this month.

The dollar gave up some gains on Friday as traders bet a three-day rally was overdone.

Some economists think it needs to decline by 30 to 40 percent in trade-weighted terms in order for the United States to substantially trim its current account deficit.

Last month, Masahiro Kawai, Kuroda's special adviser, predicted that the dollar would decline further and said Asian economies should coordinate their currency movements so they could appreciate in unison.

But Kuroda said such currency cooperation was not an imminent prospect despite the 10-member Association of South East Association Nations (ASEAN) accelerating its goal of an economic community to 2015 at their summit on the central island of Cebu.

''That currency cooperation may take more time to actually be done,'' said Kuroda, adding that he was optimistic Southeast Asian countries could achieve their goal of a single market by 2015.

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Myanmar, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

DELICATE AND DIFFICULT Kuroda said he was relatively optimistic about economic growth in Thailand this year despite recent moves to limit short-term capital inflows and warned that the problem of excessive inflows was an international one.

''This is a regional, global issue, how to manage excessive, sometimes speculative capital. Capital inflows are a very delicate and difficult issue.'' ''I understand that nowadays many economists, probably including the IMF economists, accept the notion that in some cases, capital controls, particularly capital inflow controls, not outflow controls, may be legitimate.'' He declined to comment on the impact of Bangkok's clampdown on foreign ownership laws this week on 2007 economic growth, saying the legislation had yet to be finalised.

''The Thai economy will continue to grow at 4 or 5 percent or even more than that in a sustainable manner this year.'' In September, the Manila-based bank issued a forecast of 4.0 percent growth for the Thai economy in 2007, down from a previous estimate of 5.5 percent annual growth.

Kuroda also repeated the ADB view that China would grow at around 9.5 percent in 2007 from 10.5 percent a year ago.


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