Wednesday September 9, 2009
Fall attributed to poor institutional framework, according to WEF report
SINGAPORE: Malaysia’s global competitiveness ranking dropped three positions to 24, according to the World Economic Forum’s (WEF) Global Competitiveness Report for 2009-2010 released yesterday.
The drop essentially was the result of a much poorer assessment of its institutional framework, said the report, which was released ahead of WEF’s annual meeting of the New Champions 2009 in Dalian, China.
The report said every indicator in the area had been exhibiting a downward trend since 2007, causing Malaysia to tumble from 17th to 43rd position in this dimension in just two years.
Switzerland topped the overall ranking of 133 economies, while the United States fell one place to second position, and Asia continued to feature prominently with Singapore at third and Japan at eighth, and Hong Kong, South Korea and Taiwan all in the top 20.
The report also said security was of particular concern in Malaysia with its ranking dropped 25 levels to 85th.
According to the business community, the potential of terrorism (ranked 97th) and crime (ranked 95th) both imposed significant business costs.
Also of concern was the budget deficit, which increased in 2008, amounting to almost 5% of Malaysia’s gross domestic product, it said.
However, Malaysia scored high in most other dimensions, particularly in those factors at the top end of the value chain, namely business sophistication (ranked 24th) and innovation (also ranked 24th).
The report said expectations were high for Malaysia that averaged an impressive 7% growth per year between 1990 and 2000 and a healthy 5% since then.
Mirroring this economic success, Malaysia had featured prominently in the competitiveness rankings ever since its first inclusion in 1994, it said.
“Indeed, it remains the most competitive Stage 2 (efficiency-driven) Country,” it said.
It pointed that in order to maintain its competitive edge, Malaysia now needed to prepare its conversion into a knowledge-based, innovation-driven economy.
“Improving both the quantity and quality of higher education (ranked 41st) and boosting technological readiness (ranked 37th), particularly information and communications technology penetration, would serve this effort well,” it said. — Bernama
ฉ 1995-2009 Star Publications (Malaysia) Bhd (Co No 10894-D)
Wednesday, September 9, 2009
Singapore ranked easiest country in which to do business
Published: Wednesday September 9, 2009 MYT 9:17:00 AMUpdated: Wednesday September 9, 2009 MYT 2:24:07 PM
Update includes comments from the director of the report and more details
SINGAPORE: Tiny Rwanda made the biggest strides in becoming business-friendly, an annual ranking by the World Bank said Wednesday, while Singapore retained its crown as the easiest country in which to do business for a fourth year.
Rwanda, the first Sub-Sahara African nation to be named the top reformer since the World Bank began its Doing Business report in 2003, jumped 76 spots to 67 by cutting bureaucratic delays to start a business and sell property, making employment laws more flexible and simplifying tax payment.
Kyrgyzstan, Macedonia and Belarus were also singled out by the bank for making positive changes, as developing economies accounted for two-thirds of the reforms measured by the report from June 2008 to May 2009.
"The tables are turning," said Sylvia Solf, director of the report.
"Now you see more and more reforms happening in low- and lower-middle-income economies."
The report ranks 183 countries based on 10 indicators that measure the time and cost of government requirements in starting, operating and closing a business, trading across borders and paying taxes.
The rankings don't reflect macroeconomic policy, infrastructure, workforce skills or crime rates.
After Singapore, New Zealand ranked second, followed by Hong Kong and the United States.
The top 10 countries were unchanged from the previous report except United Kingdom at five switched places with Denmark at six.
The bank highlighted how the top-ranked countries are increasingly providing business services over the Internet, such as tax payment, property registration, and construction permits.
"Singapore has put a lot of emphasis on implementing e-government initiatives, making everything as transparent, easy and efficient as possible for local businesses," Solf said.
Ireland, Canada, Australia and Norway rounded out the top 10.
The rankings of most large economies were little changed from a year earlier with Japan at 15, Germany at 25, China at 89, and Russia at 120.
Colombia was the highest-ranked Latin American country at 37 while Venezuela, at 177, was the lowest and the only country in the bottom 16 not in Africa, the bank said.
To open a business in Venezuela, it takes 141 days to complete 16 procedures, while in second-ranked New Zealand, it only takes one day for the single procedure, the report said. - AP
Update includes comments from the director of the report and more details
SINGAPORE: Tiny Rwanda made the biggest strides in becoming business-friendly, an annual ranking by the World Bank said Wednesday, while Singapore retained its crown as the easiest country in which to do business for a fourth year.
Rwanda, the first Sub-Sahara African nation to be named the top reformer since the World Bank began its Doing Business report in 2003, jumped 76 spots to 67 by cutting bureaucratic delays to start a business and sell property, making employment laws more flexible and simplifying tax payment.
Kyrgyzstan, Macedonia and Belarus were also singled out by the bank for making positive changes, as developing economies accounted for two-thirds of the reforms measured by the report from June 2008 to May 2009.
"The tables are turning," said Sylvia Solf, director of the report.
"Now you see more and more reforms happening in low- and lower-middle-income economies."
The report ranks 183 countries based on 10 indicators that measure the time and cost of government requirements in starting, operating and closing a business, trading across borders and paying taxes.
The rankings don't reflect macroeconomic policy, infrastructure, workforce skills or crime rates.
After Singapore, New Zealand ranked second, followed by Hong Kong and the United States.
The top 10 countries were unchanged from the previous report except United Kingdom at five switched places with Denmark at six.
The bank highlighted how the top-ranked countries are increasingly providing business services over the Internet, such as tax payment, property registration, and construction permits.
"Singapore has put a lot of emphasis on implementing e-government initiatives, making everything as transparent, easy and efficient as possible for local businesses," Solf said.
Ireland, Canada, Australia and Norway rounded out the top 10.
The rankings of most large economies were little changed from a year earlier with Japan at 15, Germany at 25, China at 89, and Russia at 120.
Colombia was the highest-ranked Latin American country at 37 while Venezuela, at 177, was the lowest and the only country in the bottom 16 not in Africa, the bank said.
To open a business in Venezuela, it takes 141 days to complete 16 procedures, while in second-ranked New Zealand, it only takes one day for the single procedure, the report said. - AP
Traditional unit trust funds suffer big losses when stock market crashes
Wednesday September 9, 2009
Personal Investing - By ooi Kok Hwa
AS a result of the sharp stock market crashes in September and October last year, a lot of traditional unit trust funds suffered huge losses last year and early this year.
Even though the performance of those funds has recovered greatly over the past few months, the bad experience has caused some investors, especially those with low risk tolerance, to sell a big portion of their holdings as they felt very uncomfortable with the risks involved.
There are three main approaches in managing a portfolio, namely relative return, absolute return and total return approaches.
Most of the unit trust funds in the market use the relative return approach. Their key objective is to beat the stock market index.
For example, if we are buying normal equity unit trust funds, the key objective is to beat the benchmark index, FTSE Bursa Malaysia KL Composite Index (FBM KLCI).
As long as they are able to beat the FBM KLCI, they will claim that they have already outperformed the market.
For example, if the FBM KLCI plunged by 40% and their fund returns dropped by 30%, as their fund returns dipped less than the KLCI by 10% (40% - 30%), they would claim that their funds outperformed the market by 10% even though their funds still incurred a big loss of 30%.
Investors with low-risk tolerance level would feel very uncomfortable as they have suffered a loss of 30%! As a result, investors with high aversion to losses and fear about market uncertainties may prefer the absolute and total return approaches.
One of the key advantages of using these approaches is that they use cash return as the benchmark.
For example, they can use fixed deposit (FD) returns as the benchmark return. Given that FD cannot provide negative returns, fund managers using these approaches will have to generate positive returns to outperform the FD returns.
Normally, fund managers will set a target return above the cash return.
For example, they may set a target return of 5% above the 12-month FD return. If the 12-month FD return is 2.5%, they need to generate a return of 7.5% (5%+2.5%) each year.
Given that absolute and total return approaches do not need to benchmark against the stock market index, fund managers using these approaches will hold all cash whenever the market experiences big crashes whereas the relative return approach requires the funds to stay invested i.e. may be at least more than 50%.
This explains why traditional unit trust funds, which mainly uses the relative return approach, suffer big losses whenever the stock market crashes as they are required to keep investment at big percentages even though the stock market is heading south.
To them, the biggest risk is to underperform the benchmark index whereas the biggest risk faced by the absolute and total return approaches is losing the capital.
Apart from constantly looking for positive returns, the absolute and total return approaches may use derivative instruments to enhance their returns. They may buy futures to generate higher returns if they feel that the stock market sentiment is bullish and the overall market is on the uptrend.
Besides, they can adopt any investment strategy and invest in any asset classes or any markets to generate positive returns.
Hence, investors may invest in various types of assets, including some alternative investments like exchange-traded funds, commodities and properties or different overseas markets, like the United States, Hong Kong or Singapore.
As a result, the funds’ performance will have low correlation to the overall market movements.
The main difference between the absolute return and total return approaches is that the former may borrow money to invest whereas the latter does not allow gearing.
Besides, for those countries that allow short-selling, the absolute return approach may sell short the market.
Nevertheless, the key risk faced by both approaches is that they may underperform the overall market during a bull market.
Given that they do not have to benchmark to the stock market index, they may be under-invested during a bull market.
As a result, their returns will be lower compared with those traditional unit trusts that adopt the relative return approach.
In short, investors need to understand that investing funds using either the absolute and total return approaches or relative return approach involve risks.
Investors need to understand their own risk tolerance levels before investing in funds using the absolute and total return approaches because they may be investing in some investment instruments that they are not familiar with.
● Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.
ฉ 1995-2009 Star Publications (Malaysia) Bhd (Co No 10894-D)
Personal Investing - By ooi Kok Hwa
AS a result of the sharp stock market crashes in September and October last year, a lot of traditional unit trust funds suffered huge losses last year and early this year.
Even though the performance of those funds has recovered greatly over the past few months, the bad experience has caused some investors, especially those with low risk tolerance, to sell a big portion of their holdings as they felt very uncomfortable with the risks involved.
There are three main approaches in managing a portfolio, namely relative return, absolute return and total return approaches.
Most of the unit trust funds in the market use the relative return approach. Their key objective is to beat the stock market index.
For example, if we are buying normal equity unit trust funds, the key objective is to beat the benchmark index, FTSE Bursa Malaysia KL Composite Index (FBM KLCI).
As long as they are able to beat the FBM KLCI, they will claim that they have already outperformed the market.
For example, if the FBM KLCI plunged by 40% and their fund returns dropped by 30%, as their fund returns dipped less than the KLCI by 10% (40% - 30%), they would claim that their funds outperformed the market by 10% even though their funds still incurred a big loss of 30%.
Investors with low-risk tolerance level would feel very uncomfortable as they have suffered a loss of 30%! As a result, investors with high aversion to losses and fear about market uncertainties may prefer the absolute and total return approaches.
One of the key advantages of using these approaches is that they use cash return as the benchmark.
For example, they can use fixed deposit (FD) returns as the benchmark return. Given that FD cannot provide negative returns, fund managers using these approaches will have to generate positive returns to outperform the FD returns.
Normally, fund managers will set a target return above the cash return.
For example, they may set a target return of 5% above the 12-month FD return. If the 12-month FD return is 2.5%, they need to generate a return of 7.5% (5%+2.5%) each year.
Given that absolute and total return approaches do not need to benchmark against the stock market index, fund managers using these approaches will hold all cash whenever the market experiences big crashes whereas the relative return approach requires the funds to stay invested i.e. may be at least more than 50%.
This explains why traditional unit trust funds, which mainly uses the relative return approach, suffer big losses whenever the stock market crashes as they are required to keep investment at big percentages even though the stock market is heading south.
To them, the biggest risk is to underperform the benchmark index whereas the biggest risk faced by the absolute and total return approaches is losing the capital.
Apart from constantly looking for positive returns, the absolute and total return approaches may use derivative instruments to enhance their returns. They may buy futures to generate higher returns if they feel that the stock market sentiment is bullish and the overall market is on the uptrend.
Besides, they can adopt any investment strategy and invest in any asset classes or any markets to generate positive returns.
Hence, investors may invest in various types of assets, including some alternative investments like exchange-traded funds, commodities and properties or different overseas markets, like the United States, Hong Kong or Singapore.
As a result, the funds’ performance will have low correlation to the overall market movements.
The main difference between the absolute return and total return approaches is that the former may borrow money to invest whereas the latter does not allow gearing.
Besides, for those countries that allow short-selling, the absolute return approach may sell short the market.
Nevertheless, the key risk faced by both approaches is that they may underperform the overall market during a bull market.
Given that they do not have to benchmark to the stock market index, they may be under-invested during a bull market.
As a result, their returns will be lower compared with those traditional unit trusts that adopt the relative return approach.
In short, investors need to understand that investing funds using either the absolute and total return approaches or relative return approach involve risks.
Investors need to understand their own risk tolerance levels before investing in funds using the absolute and total return approaches because they may be investing in some investment instruments that they are not familiar with.
● Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.
ฉ 1995-2009 Star Publications (Malaysia) Bhd (Co No 10894-D)
Gold price touches highest mark in 18 months, US$ down
Wednesday September 9, 2009 MYT 7:54:00 AM
NEW YORK: Gold pushed above the US$1,000 mark Tuesday for the first time since February as hopes for an improving economy fed a broader rally in commodities.
It had risen as high as $1,009.70, the first time it topped $1,000 since early this year and the highest level since mid-March last year.
Gold closed under $950 on Aug. 27.
December silver jumped 22.5 cents to $16.510 an ounce and hit a 13-month high of $16.860.
A weaker dollar also drove prices higher, analysts said.
The gains also came after the Group of 20 leading economies pledged at a weekend meeting in London to maintain higher levels of government spending and low interest rates to help the world's economies recover from recession.
Concerns that a recovery could spark inflationary pressures helped lift prices for gold, which investors often use as a hedge against inflation.
Gold for December delivery rose $3.10 to settle $999.80 an ounce on the New York Mercantile Exchange.
Copper, nickel and zinc also gained.
Benchmark crude rose more than $3 a barrel.
Tom Winmill, portfolio manager of the Midas Fund in New York, contends that the gain in gold is, in part, a show of confidence by investors and not just a guard against the dollar.
He said rising prices for commodities like platinum and oil signal that investors are placing bets on an improvement in the economy.
"Prices are rising for commodities and that's going to carry gold," he said. Winmill said, however, that a weaker dollar eventually could be the biggest force pushing gold higher.
"Ultimately, weakness in the dollar is going to be the thing that is going to underpin a big, big move in gold," he said.
The gains in gold prices follow a rally last week that came as the dollar weakened and as analysts said investors were looking for areas of safety.
A six-month surge in stocks has left the Standard & Poor's 500 index up 50 percent from a 12-year low in early March.
Gains of that size often take years to accumulate, and some investors are worried the stock market is due for a correction.
In other trading, light, sweet crude for October delivery rose $3.08 to settle at $71.10 a barrel on the New York Mercantile Exchange.
Gasoline futures for October delivery rose more than 5.26 cents to $1.8289 a gallon. Heating oil advanced 6.2 cents to $1.7825 a gallon.
Natural gas rose 7.9 cents to $2.807 per 1,000 cubic feet.
Grain prices were mixed on the Chicago Board of Trade.
December wheat futures fell 12.75 cents to $4.59 a bushel.
Corn for December delivery rose 1.25 cents to $3.0750 a bushel.
November soybeans rose 14.5 cents to $9.3650 a bushel.
Other soft commodities, like cotton, cocoa and coffee rose. Orange juice and sugar fell.
Meanwhile United States dollar fell to a low for the year Tuesday as gold prices shot above $1,000 an ounce before giving some ground and investors switched funds into riskier investments.
Commitments from global leaders this weekend to continue underwriting the global recovery helped drive investors away from the "safe haven" dollar and into emerging-market currencies and equities, analysts said.
Published comments from a Chinese government official in a British newspaper knocking the Federal Reserve's policy of buying bonds also drove the dollar lower, said Joseph Trevisani, chief market analyst at FXSolutions.
"The Chinese have serious influence," he said. China is the largest holder of U.S. Treasury securities, and its buying of U.S. debt enables the government to fund its deficit spending.
The 16-nation euro rose as high as $1.4535 in afternoon trading, its highest level this year, from $1.4337 late Monday, before backtracking to $1.4490 in later trading.
The British pound rose to $1.6487 from $1.6335, while the dollar dropped to 92.32 Japanese yen from 92.96 yen.
The dollar index fell as low as 77.05 against a basket of six major world currencies that includes the euro, yen, Canadian dollar, British pound, Swedish krona and Swiss franc.
That's its lowest since last September.
Markets have been rising after finance officials from the Group of 20 leading economies pledged to maintain government spending, low interest rates and expansion of the money supply in order to buck up the global economy.
The ministers met this weekend in London. Those moves could help boost economic activity and liquidity in financial markets, but can weigh on the value of a currency.
The current U.S. rate near zero means investors can earn better returns on their funds in countries with higher yields, such as, for example, Poland, Turkey, Brazil and Australia.
"People are loading up on high-yielders," said Win Thin, senior currency strategist at Brown Brothers Harriman in New York, as they get more optimistic about the global economy's growth outlook.
A report from a United Nations agency released on Monday also called for a reduced role for the dollar as the world's primary reserve currency.
And in an interview published on Sunday, Cheng Siwei, a Chinese official, knocked the Fed's policy of buying bonds as an inflation trigger that will undermine the dollar.
The Federal Reserve has committed to buying up to $300 billion in longterm Treasurys to boost liquidity in financial markets and hold down interest rates.
"Most of our foreign reserves are in U.S. bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," the Chinese official said in the interview in the U.K.'s Telegraph newspaper.
China and Russia have been vocal this year about the need to diversify reserves away from the dollar as its value dropped.
Chinese officials have called for the creation of a new global reserve currency by the International Monetary Fund.
Siwei's interview and the U.N. report have "drawn attention back to the fact that we have twin deficits and low interest rates," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon in New York.
That's "simply feeding into current negative dollar sentiment" as sovereign nations gradually sell their U.S. dollars.
There's an assumption that "when Chinese officials speak on this topic they are not doing it without having their remarks vetted by the Chinese government," Trevisani said.
Whether that is true or not, he said, "you assume that there is some warning here."
China, the largest foreign holder of U.S. Treasury securities, trimmed its holdings, to $776.4 billion in June from $801.5 billion in May.
Russia also reduced its holdings 3.7 percent to $119.9 billion in June.
The price of gold, meanwhile, shot past $1,000 an ounce for the first time since February. Gold for December delivery peaked at $1,009.70, the highest since March 2008, on the New York Mercantile Exchange before falling back to settle at $999.80.
Gold is often used as a hedge against inflation and a weak dollar.
Other currencies also climbed against the dollar, especially those in countries which are major exporters of commodities, as oil prices gained more than $2.
A strong economy would use more commodities in factories and transportation.
The New Zealand dollar hit its strongest point since last September at 69.83 U.S. cents, while the Australian dollar peaked at 86.58 U.S. cents, its highest level in more than a year.
The dollar dropped to 1.0807 Canadian dollars from 1.0763 and tumbled to 1.8260 Brazilian reals from 1.8445 reals late Monday.
In other trading, the dollar hit a low for 2009 against the Swiss franc at 1.0428 on Tuesday, down from 1.0597 late Monday.
It later traded at 1.0472 Swiss francs. AP
ฉ 1995-2009 Star Publications (Malaysia) Bhd (Co No 10894-D)
NEW YORK: Gold pushed above the US$1,000 mark Tuesday for the first time since February as hopes for an improving economy fed a broader rally in commodities.
It had risen as high as $1,009.70, the first time it topped $1,000 since early this year and the highest level since mid-March last year.
Gold closed under $950 on Aug. 27.
December silver jumped 22.5 cents to $16.510 an ounce and hit a 13-month high of $16.860.
A weaker dollar also drove prices higher, analysts said.
The gains also came after the Group of 20 leading economies pledged at a weekend meeting in London to maintain higher levels of government spending and low interest rates to help the world's economies recover from recession.
Concerns that a recovery could spark inflationary pressures helped lift prices for gold, which investors often use as a hedge against inflation.
Gold for December delivery rose $3.10 to settle $999.80 an ounce on the New York Mercantile Exchange.
Copper, nickel and zinc also gained.
Benchmark crude rose more than $3 a barrel.
Tom Winmill, portfolio manager of the Midas Fund in New York, contends that the gain in gold is, in part, a show of confidence by investors and not just a guard against the dollar.
He said rising prices for commodities like platinum and oil signal that investors are placing bets on an improvement in the economy.
"Prices are rising for commodities and that's going to carry gold," he said. Winmill said, however, that a weaker dollar eventually could be the biggest force pushing gold higher.
"Ultimately, weakness in the dollar is going to be the thing that is going to underpin a big, big move in gold," he said.
The gains in gold prices follow a rally last week that came as the dollar weakened and as analysts said investors were looking for areas of safety.
A six-month surge in stocks has left the Standard & Poor's 500 index up 50 percent from a 12-year low in early March.
Gains of that size often take years to accumulate, and some investors are worried the stock market is due for a correction.
In other trading, light, sweet crude for October delivery rose $3.08 to settle at $71.10 a barrel on the New York Mercantile Exchange.
Gasoline futures for October delivery rose more than 5.26 cents to $1.8289 a gallon. Heating oil advanced 6.2 cents to $1.7825 a gallon.
Natural gas rose 7.9 cents to $2.807 per 1,000 cubic feet.
Grain prices were mixed on the Chicago Board of Trade.
December wheat futures fell 12.75 cents to $4.59 a bushel.
Corn for December delivery rose 1.25 cents to $3.0750 a bushel.
November soybeans rose 14.5 cents to $9.3650 a bushel.
Other soft commodities, like cotton, cocoa and coffee rose. Orange juice and sugar fell.
Meanwhile United States dollar fell to a low for the year Tuesday as gold prices shot above $1,000 an ounce before giving some ground and investors switched funds into riskier investments.
Commitments from global leaders this weekend to continue underwriting the global recovery helped drive investors away from the "safe haven" dollar and into emerging-market currencies and equities, analysts said.
Published comments from a Chinese government official in a British newspaper knocking the Federal Reserve's policy of buying bonds also drove the dollar lower, said Joseph Trevisani, chief market analyst at FXSolutions.
"The Chinese have serious influence," he said. China is the largest holder of U.S. Treasury securities, and its buying of U.S. debt enables the government to fund its deficit spending.
The 16-nation euro rose as high as $1.4535 in afternoon trading, its highest level this year, from $1.4337 late Monday, before backtracking to $1.4490 in later trading.
The British pound rose to $1.6487 from $1.6335, while the dollar dropped to 92.32 Japanese yen from 92.96 yen.
The dollar index fell as low as 77.05 against a basket of six major world currencies that includes the euro, yen, Canadian dollar, British pound, Swedish krona and Swiss franc.
That's its lowest since last September.
Markets have been rising after finance officials from the Group of 20 leading economies pledged to maintain government spending, low interest rates and expansion of the money supply in order to buck up the global economy.
The ministers met this weekend in London. Those moves could help boost economic activity and liquidity in financial markets, but can weigh on the value of a currency.
The current U.S. rate near zero means investors can earn better returns on their funds in countries with higher yields, such as, for example, Poland, Turkey, Brazil and Australia.
"People are loading up on high-yielders," said Win Thin, senior currency strategist at Brown Brothers Harriman in New York, as they get more optimistic about the global economy's growth outlook.
A report from a United Nations agency released on Monday also called for a reduced role for the dollar as the world's primary reserve currency.
And in an interview published on Sunday, Cheng Siwei, a Chinese official, knocked the Fed's policy of buying bonds as an inflation trigger that will undermine the dollar.
The Federal Reserve has committed to buying up to $300 billion in longterm Treasurys to boost liquidity in financial markets and hold down interest rates.
"Most of our foreign reserves are in U.S. bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," the Chinese official said in the interview in the U.K.'s Telegraph newspaper.
China and Russia have been vocal this year about the need to diversify reserves away from the dollar as its value dropped.
Chinese officials have called for the creation of a new global reserve currency by the International Monetary Fund.
Siwei's interview and the U.N. report have "drawn attention back to the fact that we have twin deficits and low interest rates," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon in New York.
That's "simply feeding into current negative dollar sentiment" as sovereign nations gradually sell their U.S. dollars.
There's an assumption that "when Chinese officials speak on this topic they are not doing it without having their remarks vetted by the Chinese government," Trevisani said.
Whether that is true or not, he said, "you assume that there is some warning here."
China, the largest foreign holder of U.S. Treasury securities, trimmed its holdings, to $776.4 billion in June from $801.5 billion in May.
Russia also reduced its holdings 3.7 percent to $119.9 billion in June.
The price of gold, meanwhile, shot past $1,000 an ounce for the first time since February. Gold for December delivery peaked at $1,009.70, the highest since March 2008, on the New York Mercantile Exchange before falling back to settle at $999.80.
Gold is often used as a hedge against inflation and a weak dollar.
Other currencies also climbed against the dollar, especially those in countries which are major exporters of commodities, as oil prices gained more than $2.
A strong economy would use more commodities in factories and transportation.
The New Zealand dollar hit its strongest point since last September at 69.83 U.S. cents, while the Australian dollar peaked at 86.58 U.S. cents, its highest level in more than a year.
The dollar dropped to 1.0807 Canadian dollars from 1.0763 and tumbled to 1.8260 Brazilian reals from 1.8445 reals late Monday.
In other trading, the dollar hit a low for 2009 against the Swiss franc at 1.0428 on Tuesday, down from 1.0597 late Monday.
It later traded at 1.0472 Swiss francs. AP
ฉ 1995-2009 Star Publications (Malaysia) Bhd (Co No 10894-D)
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