ADB head: Asian currencies stable amid reversal of dollar strength

By Tetsushi Kajimoto and Takashi Umekawa

TOKYO (Reuters) - Asian Development Bank President Takehiko Nakao said on Wednesday that the "correction" of the dollar strength since the start of this year is unlikely to cause market turmoil, with the yuan and other Asian currencies stabilising.

The head of the Manila-based lender also gave a sanguine view on China, saying that the world's second largest economy will avoid a hard-landing as it rebalances from investment to consumption-led growth.

"Asian currencies including the yuan are more stable now than before. China must not hurry to loosen its existing regulations against capital outflows and it may intervene to an extent" to support the yuan, Nakao told Reuters in an interview in Tokyo.

Nakao said expectations for higher dollar interest rates have been digested in the market, causing the dollar strength to be "corrected", while investors bet the United States will go slow in raising interest rates.

"I don't expect the correction of dollar strength to cause a big turmoil in financial markets. I have not heard concerns about a currency war in Asia," said Nakao, former Japanese vice finance minister for international affairs.

(Reporting by Tetsushi Kajimoto; Editing by Richard Borsuk)