China reassures on dollar before G8
SINGAPORE (Reuters) - China said the dollar will retain its global dominance for years to come, offering its assurances ahead of the Group of Eight summit just as it takes another step to boost the profile of its own yuan currency.
Beijing has floated the idea of looking for an alternative to the dollar as global reserve currency and France and Russia on Sunday called for a debate on the matter at this week's G8 summit in Italy, expanded to include China and other developing nations.
However, G8 sources suggested there was no appetite for any change to the status quo, and China itself played down the likelihood of a change in the current regime.
"The U.S. dollar is still the most important and major reserve currency of the day, and we believe that that situation will continue for many years to come," Chinese Vice Foreign Minister He Yafei told reporters in Rome.
The debate is highly sensitive in financial markets, which are wary of risks to U.S. asset values, and last week the dollar dipped briefly after suggestions its role may form a part of the agenda of the July 8-10 summit.
China's assurances helped the U.S. dollar inch higher in very thin Asian trade on Monday.
The U.S. currency and government bonds were also supported as safe havens amid market caution ahead of the G8 summit and given the weak start for stock markets, still smarting from last week's dismal U.S. jobs report.
Japan's Nikkei slipped 1.5 percent, while the MSCI index of stock markets elsewhere in Asia-Pacific eased 0.3 percent, reflecting doubts over the strength and staying power of a global recovery.
Seoul shares bucked the region-wide trend, lifted by a strong earnings guidance from Samsung Electronics (005930.KS) ahead of its results due on July 24.
SAMSUNG CHEERS
In its first ever profit guidance, the world's top maker of memory chips and flat screen TVs, forecast second-quarter earnings well above market estimates, boosting its shares by more than 4 percent.
"Shares started off weak but Samsung Electronics' earnings estimates boosted market sentiment, and brightened views on the broader outlook ahead of earnings season," said Kim Seung-han, a market analyst at HI Investment Securities.
With light data calendar this week, investors are likely to focus on the upcoming deluge of quarterly earnings reports and the meeting of the world's top industrial nations.
The G8 summit is expected to highlight signs that major economies were stabilising, but also emphasise that it was too early yet to withdraw policy stimulus aimed at preventing the recession from becoming a depression.
In Japan, central bank governor Masaaki Shirakawa said funding remained tight for many firms even as some calm returned to financial markets. The comments reinforced views that the Bank of Japan will extend its emergency corporate financing support beyond its September deadline. Continued...
