Posted on 12/02/2006 4:45:12 PM PST by shrinkermd
...NOT THAT THE DOLLAR NEEDS MUCH INDUCEMENT these days to decline. The euro soared past $1.33 last week, which was less than three cents shy of its peak in its relatively short existence, which was touched on New Year's Eve of 2004. The British pound, whose history goes back a bit further, was closing in on two bucks at $1.98, the highest since George Soros made his killing when sterling was kicked out of the Exchange Rate Mechanism in September 1992...
"...Gregory Weldon points to a pertinent quote from Deputy Governor Wu Xiaoling of the People's Bank of China about the risks faced by countries accumulating massive foreign-exchange reserves: "Firstly, long-term interest rates are falling, reducing returns on bond investments. Secondly, the exchange rate of the dollar, which is the major reserve currency, is going lower, increasing the depreciation risk for East Asian reserve assets."
Thus, Weldon notes, these countries are being hit with a two-edged sword -- lower returns on dollar holdings and depreciation of the currency. He also notes that an anonymous senior Chinese central-bank official warned that "these low rates can easily lead to an asset-price bubble, and this is what we are paying attention to."
..."Despite all the chatter about global imbalances and the need for a correction in the greenback, the world, in our opinion, just isn't ready for a sizable, secular decline in the buck. Such a move would undercut the primary source of growth of many nations: exports."
"...To prevent a decline in the dollar -- or more precisely, a rise in the value of their currencies that would crimp export earnings -- foreign central banks are accumulating greenbacks at a furious pace. But these authorities are beginning to have qualms about the effects of the monetary manipulations...
(Excerpt) Read more at online.barrons.com ...
Wrong word - fact, not "opinion"
"The euro soared past $1.33 last week, which was less than three cents shy of its peak in its relatively short existence, which was touched on New Year's Eve of 2004."
http://futures.tradingcharts.com/charts/ECM.GIF
EuroFX (EC,CME) Monthly Price Chart
More US manufacturing will need to happen.
I should make it my tagline.
more U.S. manufacturing? I thought we just did malls and houses.
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