Dollar Hits 11-Year Low Vs Pound

MSN Money As Adapted From Reuters ^ | 12 December 2003 | Carolyn Cohn

[shrinkermd]

LONDON (Reuters) - The dollar hit 11-year lows against the pound and eyed record lows against the euro on Friday, as looming U.S. trade data focused attention on the United States' wide current account deficit.

Worries the world's largest economy will find it increasingly hard to attract funds to finance its deficit have knocked the dollar to record lows against the euro and three-year lows against the yen this week.

The yen found additional support on Friday from news of an unexpectedly strong reading in the Bank of Japan's influential quarterly ``tankan'' corporate sentiment survey, although wariness of yen-selling intervention by Japanese authorities kept dollar bears at bay.

``We are getting data on the U.S. current account deficit later and that's always a concern,'' said Niels Christensen, currency strategist at Societe Generale.

The dollar weakened as far as $1.7498 to the pound at 3 a.m. EST, its worst showing since October 1992, shortly after sterling left Europe's Exchange Rate Mechanism.

It also lost a quarter percent from the U.S. close to $1.2246 per euro, a third of a cent above record lows set on Tuesday, which marked the end of a run of eight successive daily record lows.

The dollar weakened slightly against the yen to 107.91 yen, compared with three-year lows set on Tuesday around 106.75.

[shrinkermd]

I remain sanguine about this situation. In a sense we are depreciating our debts as well as our dollar. Further, we are also levying a comprehensive tariff on all imported goods and reducing the cost of our exports. This would not be permitted if we were not the big fellow on the block both economically and militarily.

[gcruse]

Works for me. Free trade implies a free currency market, too.

[pau1f0rd]

Yeah, just print more dollars and give all your gold to China. :-/

[Calvin Locke]

I was on a ski vacation in Switzerland in the mid '80s. The pound was down to a $1.05. The Swiss franc was around $.32

[LN2Campy]

so we're purposely shit-canning the dollar (debasing the coinage) to welch on our debts? How Keynesian...

[Moonman62]

Works for me. Free trade implies a free currency market, too.

What's so free about it? The dollar is weak because we have a weak dollar policy. Before that the dollar was strong because we had a strong dollar policy. The largest players control the currency market.

[Beck_isright]

Ping...

[OldFriend]

How dare you be logical!!!!!

[gcruse]

*Yawn* Oh, sorry. There's something about failing to spend billions to make imports cheaper that gives me glazed eyes.

[AmericanInTokyo]

wow, in Japan: 107 Yen to the Dollar yesterday. will have to sleep on the ground at Ueno Train Station during the next trip there. sure should make a trip 'bargain basement' for Japanese tourists to the USA, though....

[JasonC]

"we are depreciating our debts as well as our dollar"

Actually, what we are doing is giving ourselves a massive pay cut. Which makes our production more "competitive", certainly, but would do the same thing if we agreed to work for pennies. A weak currency is not a good thing. And the dollar has fallen a long way, more than enough to swamp the growth it has shown in dollar terms.

[JasonC]

When I wrote "the growth it has shown" I meant the growth the US economy has shown, of course. In gold ounces, euros, or yen, the US economy is smaller today than a year ago.

[Jimmy Valentine's brother]

George Soros at work???

[litehaus]

Geezzzz...My kid has gotten a 30K "raise" since he went to work in London all for just "Being There" (Great movie BTW)

[thatdewd]

BTTT

[mike_9958]

Actually, what we are doing is giving ourselves a massive pay cut. Which makes our production more "competitive", certainly, but would do the same thing if we agreed to work for pennies. A weak currency is not a good thing. And the dollar has fallen a long way, more than enough to swamp the growth it has shown in dollar terms.

Not sure I understand your logic.... I can buy the same American stuff for the same price, but I have to pay more for the foreign stuff. Which isn't real bad.

And because I have stock in a Global company the profits they make overseas are now worth more too, in terms of dollars. And my stock goes up.

During these economic times, when jobs are a premimum explain why this strategy of weakening the dollar is bad.

[Truth666]

This is because barrels are paid in dollars.

[upcountryhorseman]

Greenspan is running the printing presses day and night!

[Dunedain]

For the longest time the US was the only nation not playing the silly devaluation game.

But I would argue manipulating currency is not a good thing. One, its a misuse of taxpayer money. Also its unfair to currency speculators because they are working against a government using taxpayer money.

The strong dollar policy is chiefly the villain that chased production to Canada, and other Western nations. The irony is ever nation out there wants the US dollar strong. Canada, Japan, Europe - all have been aided for years by weaker currencies. Japan has already spent billions trying to shore up the US Dollar.

As a Canadian I can tell you that weak dollar means one thing. It means we became relatively less wealthy than Americans. A marketplace that weakens the US Dollar is simply reflecting the fact that that relative strength in the US has waned. Mostly due to a massive fiscal deficit and trade deficit. Economically a balancing has to occur. If a nation year after year imports more than it exports the relative wealth of that nation decreases. That decrease is reflected in the relative currency exchange rates. Of course the alternative is for that nation to start exporting enough to balance the trade deficit, but closing a gap as large as this one will take years, if not decades to achieve.

[Dunedain]

Those damn Keynsians. Funny how we fought the Cold War only to be defeated by the monetary Stalinists of our generation - from John Kenneth Galbraith to Alan Greenspan.

The US sets the example that every other Western nation follows - we just have less taxpayer money to waste on currency intervention.