The dollar stabilised on foreign exchange markets on Wednesday after policy makers sought to banish the idea that Asian central banks might diversify their reserves from US dollar assets. Despite their comments, the currency clawed back only a fraction of Tuesday's losses, recovering 0.3 per cent to $1.322 to the euro and 0.9 per cent to Y104.9 ($1.01) against the yen and highlighting continued nervousness in the currency markets.

The Bank of Korea said that while it was planning to diversify more of its reserves into higher yielding non-government bonds, it was not planning to sell existing dollar holdings.