Nov. 2 (Bloomberg) -- For Mansoor Mohi-uddin, the UBS AG managing director of currency strategy relocating to Singapore, Asia’s economic rebound can only be good news for the dollar.

“As part of my job, I meet and work closely with policy makers and I’m not under the impression they are about to desert the dollar,” said Mohi-uddin, who predicted in March that the Swiss National Bank would sell the franc against the euro three days before the central bank acted. “A move to Asia will allow me to follow developments more closely.”

Mohi-uddin, 39, will move in January, joining a growing number of banking executives settling in cities from Beijing to Sydney as the region’s economies recover from the global recession faster than the U.S. and Europe. Fifteen of Asia’s 18 stock indexes are beating the Standard & Poor’s 500 Index this year. China’s economy grew at an 8.9 percent annual rate last quarter as the U.S. expanded 3.5 percent and Britain shrank 5.2 percent.

“Australia became the first country to raise interest rates, yen volatility returned with the advent of Japan’s new government and we’ve seen a rebound in China,” Mohi-uddin said last week in an interview in Zurich, where UBS, the world’s second-biggest currency trader, is based. “The Asia-Pacific region is becoming more important, not just for the currency market, but also for the global economy.”

Asia Demand

Mohi-uddin, a fluent Urdu speaker and fan of English soccer champion Manchester United, will keep his role as head of UBS’s global foreign-exchange strategy when he moves. HSBC Holdings Plc is sending Mark McCombe, chief executive officer of its global asset-management arm, to become CEO of its Hong Kong unit in February. Stephen Roach, the Morgan Stanley chief economist who predicted China will overtake the U.S. as the world’s dominant economy, relocated to Hong Kong in 2007.

Mohi-uddin, who studied under former Bank of England Monetary Policy Committee member Charles Goodhart at the London School of Economics, said the dollar is unlikely to lose favor among Asian central banks even if it weakens in the next two years. The depth of U.S. capital markets, the lack of “strong” alternatives and the political importance of America to the region mean the dollar will remain the world’s reserve currency, he said.

The greenback will trade at the “upper end” of a range between $1.30 and $1.60 per euro, he said. It weakened 0.3 percent to $1.4772 per euro as of 12:44 p.m. in London today, bringing its decline this year to 5.4 percent.

Biggest Holders

Asia accounts for 60 percent of the world’s $7.3 trillion of international currency reserves. The Roseville, California- based Sovereign Wealth Fund Institute says China’s SAFE Investment Co. is the world’s fourth-biggest country fund, with $347 billion in assets, and Government of Singapore Investment Corp. is ranked sixth, with almost $248 billion.

Asian central banks are the biggest foreign holders of U.S. Treasuries. China owns $797 billion of the securities, up from $58.9 billion in 2000, according to the Treasury Department. The Federal Reserve’s holdings of government bonds on behalf of foreign central banks and other investors stood at $2.14 trillion as of Oct. 28, up from $1.7 trillion at the beginning of the year.

“Concern that foreign central banks won’t continue to buy Treasuries is very misplaced,” said Mohi-uddin, who has a master’s degree from the LSE in monetary economics. The dollar’s decline is being caused by “loose” U.S. fiscal and monetary policy, aimed at offsetting weak private demand, and investor appetite for higher-yielding assets, he said. Central banks’ moves out of the dollar reflect a need to reduce “concentration risks” rather than a shift in sentiment, he said.

Meeting Policy Makers

“If you talk to policy makers, you will be able to get more nuances and more insights into the policy-making process,” he said. “That’s very important for us because most investors will only be able to look at data releases and speeches.”

The move to Asia comes as sinking demand for dollar- denominated assets fuels gains in the region’s currencies. The Indonesian rupiah has risen 16 percent versus the dollar this year. The South Korean won strengthened 6 percent.

Mohi-uddin was born in Hyderabad, the capital of the southern Indian state of Andhra Pradesh and moved with his family to England when he was a child. He returned regularly to visit relatives and watched India’s economic emergence and the transformation of his home state into an information-technology hub. Companies from Amazon.com Inc., the world’s largest Internet retailer, to Qualcomm Inc., the biggest maker of semiconductors for mobile phones, are among those that have invested in Hyderabad.

1998 Start

“What happened in Hyderabad captures a lot of what’s going on in Asia in the last few decades,” Mohi-uddin said. “There was grinding poverty everywhere in the ‘70s and the ‘80s. But now things have improved tremendously.”

Mohi-uddin joined Swiss Bank Corporation in 1998 as an emerging-markets strategist shortly before the company’s $19.7 billion merger with Union Bank of Switzerland. Today, UBS is ranked second, behind Frankfurt-based Deutsche Bank AG, among the world’s biggest currency traders, according to Euromoney Institutional Investor Plc. The bank was the third-most accurate forecaster of the dollar-yen exchange rate this year, a Bloomberg survey showed.

After graduating from the LSE in 1992, Mohi-uddin worked two years for the Ministry of Finance of Uganda, a country he described as “the most beautiful place on earth” before moving back to Britain.

Learning Mandarin

Mohi-uddin and his wife Meeriam live in the Swiss town of Zug, where he keeps a collection of paintings, rugs and songkets -- hand-woven silk or cotton cloths originating from Malaysia and Indonesia that are typically patterned with gold and silver. Zug is also home to billionaire Marc Rich and companies such as Xstrata Plc, the raw-materials miner 34 percent owned by commodity trader Glencore International AG.

While the dollar remains supported by Asian demand today, it will make way for the Chinese yuan in the next three decades as the power of the world’s most-populous nation rises, said Mohi-uddin, who spent two months in China this year studying Mandarin after starting lessons when he lived in London.

“My Chinese is still basic, but I’m making an effort because I travel to China often and it’s important to be able to understand the people and their culture,” he said. “We recently met some Chinese delegates and I did the introduction in Chinese. It helped to break the ice.”

To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net.

Last Updated: November 2, 2009 07:56 EST