Morgan Stanley's Roach Says Dollar's Status Intact

The dollar will keep its status as the ``world currency'' for 15 to 20 years, said Stephen Roach, chairman of Morgan Stanley Asia Ltd., after Chinese officials signaled plans to diversify from the slumping U.S. currency.

``The yen, the euro, the sterling, the Swiss franc will take on greater roles but these still don't come close to commanding the kind of security that the U.S. dollar does in investors' minds,'' Roach, former global chief economist at Morgan Stanley, the second-biggest U.S. securities firm, said in an interview in Beijing. ``It will take 15 to 20 years'' before its status erodes.

The U.S. dollar has fallen against all 16 of the most- actively traded currencies this year, reaching record lows against the euro and Canadian dollar yesterday as Chinese officials signaled plans to diversify the nation's $1.43 trillion of foreign exchange reserves. The dollar is ``losing its status as the world currency,'' Xu Jian, a central bank vice director, told a conference in Beijing yesterday.

The dollar, trading at $1.4652 per euro at 8:01 a.m. in London, fell as low as $1.4731 yesterday on concern the Federal Reserve will cut interest rates for a third time this year to stop a housing slump from slowing the economy.
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