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Asia buys slumping US dollars

ASIAN central banks bought US dollars yesterday to weaken their own currencies, as the slumping greenback threatened their export-driven economies.<br /><br />The nations, mainly located in South East Asia, are already struggling with the tepid US recovery and weak demand for their exports from the world&rsquo;s largest economy.<br /><br />But they have been doubly hurt because their currencies have appreciated against the dollar.<br /><br />The Asian central banks that are intervening in currency markets by buying dollars include South Korea, Hong Kong, Taiwan, Thailand, the Philippines and possibly Indonesia.<br /><br />&ldquo;Stronger currency hurts exports and growth, and so emerging market policymakers are doing their best to prevent excessive gains,&rdquo; said Win Thin, senior currency strategist at Brown Brothers Harriman &amp; Co.<br /><br />Despite the intervention, the greenback hit one-year lows against a raft of regional currencies. The dollar index, which tracks its value against a basket of six main currencies, hit a 14-month low in New York trading.<br /><br />There was also an indication that Russian banks bought as much as $4bn (&pound;2.5bn) this week.<br /><br />And Jean-Claude Trichet, European Central Bank president, issued a warning about the euro&rsquo;s strength yesterday and said that authorities on both sides of the Atlantic would &ldquo;co-operate as appropriate&rdquo;.