Emerging countries currencies can continue to lose on risk

Emerging-market currencies will extend losses in the first quarter as investors’ appetite for risk worsens amid the global recession, according to Brown Brothers Harriman & Co. in New York,reported Bloomberg.com.
“Markets are only now beginning to fully appreciate the heightened risks to the global economic outlook and emerging markets remain vulnerable to class-wide waves of selling,” according to a weekly outlook report from Brown Brothers issued yesterday. “We remain most negative on emerging Europe, Middle East and African currencies due to poor fundamentals and are most constructive on Asian currencies in this environment.”
Investors should continue to buy dollars on dips against emerging-market currencies, the report said.
China on the other hand refuted U.S. President Barack Obama’s claims that China is manipulating its currency because economic conditions for the Yuan to gain “don’t exist".
The global recession has narrowed China’s trade surplus in the past few months and reduced inflows of dollars, cooling demand for the nation’s currency, Hua, chief economist at China Construction Bank Corp and formerly a senior economist at the World Bank, said in a telephone interview. China Construction is the nation’s second-largest lender.
“Naturally the conditions for the Yuan’s appreciation don’t exist any more,” he said. “The Yuan can’t be strong also because the dollar has much strengthened versus other currencies in the past few months.”
The new U.S. administration believes China is “manipulating” its currency, Timothy Geithner, Obama’s nominee for Treasury secretary, told lawmakers yesterday. The Yuan’s appreciation halted in July, after the currency gained 21 percent since a dollar peg was scrapped in July 2005.“I was very disappointed and surprised at the remarks,” Hua said. “We are concerned about rising trade protectionism in the U.S.”

China’s currency fell 0.08 percent to 6.8429 per dollar as of 1:08 p.m. in Shanghai, from 6.8371 yesterday, according to the China Foreign Exchange Trade System.