Dollar resists Chinese threat to foreign exchange position

The US dollar looks set to ride the current economic storm and retain its position as the world's reserve currency, following moves to calm speculation from China.

It had been suggested that the Chinese authorities were keen to make moves that would have seen the dollar lose its position as the world's reserve currency, after a tough year on the foreign exchange markets has seen its value fall.

However, Guan Tao, deputy head of the international payment department at China's state administration on foreign exchange, has poured cold water on the rumours by suggesting the Chinese are happy with the current situation.

Writing in Chinamoney Magazine, he said that the US dollar is likely to retain its status in the foreign exchange market, Bloomberg reports.

The announcement could help to increase confidence in the dollar and the currency saw some gains on the back of the news.

It is hoped this will ease the turbulence in the foreign exchange markets and help bring some stability to the sector.

The dollar has fallen considerably over the past 12 months, with the banking crisis in October damaging confidence in the currency.