主题：【文摘】美元或有望延续升势 -- Davi

It's a Dollar-Eat-Dollar World Here in Asia: William Pesek Jr.

Jan. 12 (Bloomberg) -- ``What about the dollar?''

The question surprised even Kofi Annan, not a man easily stumped by reporters. The United Nations secretary-general merely smiled and shrugged his shoulders when pressed on whether the dollar's slide was hurting Asia.

It happened last week in Jakarta, where Annan was meeting with global leaders on relief efforts for the Dec. 26 tsunami that killed more than 160,000 around Asia. The question seems to mark a shift of the dollar's drop from solely a financial issue to a socioeconomic one, too.

Here in Asia, the dollar's drops last year of 7.1 percent against the euro and 4.3 percent to the yen prompted consternation at the highest government levels. Some threatened to sell their currencies to help exporters stay competitive and many urged the U.S. to stabilize its currency. All in vain -- the dollar yesterday dropped the most in more than two weeks.

Yet all the hand wringing over the dollar's swoop ignores the fact it's been a boon for emerging Asian markets and, by extension, some of this region's economies.

It's pushed massive amounts of liquidity into developing- nation debt, property, commodities and other assets here in Asia. The trend has been particularly acute thanks to a surge in investment into China, and it's helping the global economy run at its fastest pace in two decades.

When, Or If

The upshot is that Asia's outlook depends more and more on when, or if, the dollar stops sliding.

``The sentiment towards the dollar is driving financial markets, and no other factors come close in impact,'' says Andy Xie, chief Asia economist at Morgan Stanley.

A reversal of the trend might do more harm than good to the region's economies, pulling out of Asian markets money that's holding down bond yields and boosting stocks.

A bottoming out of the dollar may signal a peak of all riskier assets globally. As such, it's likely to determine how 2005 pans out for many investors.

If the dollar remains weak, 2005 turns out similar to 2004 with asset values gaining further and the global economy strong; a convincing bottom may bring major reversals in asset markets.

``The overvaluation of commodities and emerging market debt and stocks, for example, could correct quickly,'' Xie says. ``A sharp slowdown in the emerging economies as well as the global economy would follow.''

Remember When

If you doubt the dollar's linchpin role in Asia, think back to 1995 when it fell from 100 yen to 78 yen. That brought a rush of hot money to Asia. Cracks in this region's economy began surfacing a year later as the dollar regained strength, prompting investors to flee Asia faster than they might've otherwise.

No, a sudden dollar rally won't precipitate financial crisis in Asia. This region's financial systems are in far better shape than a decade ago; foreign-denominated debt is down and currency reserves are plentiful. China's boom is boosting growth in economies from South Korea to Vietnam.

Still, riskier assets that have been a one-way bet -- a winning one -- in recent years might be in for some bumpy times. That's not all bad; so long as the dollar's rise is orderly, it may take some air out of asset bubbles around the globe.

After all, what worries observers like Xie are the imbalances popping up in the investment world. Many global investors with scant knowledge of emerging markets like Asia's hand money over to hedge funds. As the fast-growing number of Asian hedge funds invest this cash, a global asset reallocation is occurring.

Can't Lose?

Xie says that's causing a ``massive inflation of emerging market assets, which results in a better performance of emerging markets in the short term and validates global investors' increased allocation into emerging markets.''

In other words, some Asia investors may think they can't lose, just as many did before the region's 1997-1998 crisis.

In normal times, this flow of funds out of the U.S. would've raised interest rates, slowing the outflow. Because the dollar is the key currency for central bank reserves and global trade, the outflow, after inflating emerging markets, returns to the U.S. as central banks buy U.S. Treasuries.

Thus the U.S. escapes the main consequence of a weak currency -- surging bond yields -- and a weak dollar is expansionary for global liquidity and Asia's economies.

There's a dark side to all this, though.

``The power of the weak-dollar psychology is that it makes global investors oblivious of the usual concerns about emerging markets,'' Xie explains. ``Hence, the risk premium has virtually disappeared.''

Typically, corporate governance problems surfacing in economies like China would cause major market correction. They haven't yet. If recent troubles at China Aviation Oil (Singapore) Corp. -- which lost $550 million trading derivatives -- are the tip of the iceberg, emerging-market investors may be in for a rough year. Ditto for a surge in global oil prices.

For now, though, Asian governments hoping for a weaker dollar should be careful what they wish for.