Posted on 06/26/2002 4:16:14 AM PDT by arete
LONDON (CBS.MW) -- The dollar tumbled against major currencies on Wednesday as the revelation of a $3.8 billion in an apparent accounting fraud at WorldCom unhinged confidence in U.S. stocks and raised concerns about heavy selling pressure when the New York exchanges open.
The Bank of Japan intervened three times overnight to bolster the dollar, twice in Asia and once in London markets, analysts said. The Japanese central bank is believed to have spent some $5 billion defending the dollar in the interventions.
The dollar was at 120.30 yen following the third intervention in London. Dealers expect that Japanese financial authorities are seeking to keep the dollar above the 120 yen level. Tokyo fears a rapidly rising yen could choke off a fragile export-led economic recovery and stoke deflationary pressures.
The euro charged ahead 2 full cents -- a massive move in the foreign exchange markets-- to a peak of 99.41 U.S. cents. Analysts are expecting the euro to reach parity with the dollar, but say concerns of a fourth Bank of Japan intervention Wednesday are keeping euro buyers at bay for the moment.
Dollar selling was seen across the board, including hedge funds, corporations and investors. The currency markets are anticipating intense selling pressure in U.S. stocks Wednesday.
"Confidence was damaged enough already and the stock markets were bound to test September lows even before WorldCom came out with the news," said Will Rugg, a currency analyst at S&P in London.
"Buying stocks is already a leap of faith on the outlook for corporate profits, add the WorldCom on top and who's going to get involved in equities now?" he said. European stocks were sharply selling off Wednesday morning.
After the close of U.S. trading Tuesday, WorldCom, America's No. 2 long distance company, unveiled what is believed to be the largest accounting fraud in U.S. history. See full story on WorldCom restatement, CFO fired.
Gold rallies
The uncertainty benefited gold. Gold bullion prices soared to $322.50/$323.00 an ounce in early Asian trading against $320.30/80 in late New York trade. Spot prices rose to $324.30 in London.
The Bank of Japan's intervention -- its sixth daily dollar-buying move since late May and the second this week -- pushed the greenback as high as 121.10 yen in mid-afternoon action. But selling pressure resumed quickly and the dollar retreated to 120.30 yen by late afternoon.
The dollar has declined 9 percent since early April against the yen. The BOJ's intervention Monday action had also failed to support the dollar for long against the backdrop of falling New York stock prices and fears of more capital flows out of the U.S.
Richard W.
Richard W.
I don't think that we have enough prison space to lock up all of Wall Street.
Richard W.
They've been busy lately - but it seems that folks are viewing PPT's market run-ups as selling opportunities. They've done their magic as least twice in the last three weeks but the effect lasted a day or so, unlike previous times where folks bought into the markets for at least a month. The PPT is having less and less influence on the market. A commentary from Schaeffer’s Research cracked me up – it was written and posted on their site just before the markets mysteriously reversed direction and climbed sharply and gold was crushed simultaneously. Trademark PPT action if I ever saw it.
From Schaeffer's Research:
Schaeffer's Midday Options Update for Monday -- Don't Miss the Blue Light Special
By Tom Reynolds (treynolds@sir-inc.com)
6/24/2002 1:11 PM ET
It's beginning to look a lot like … another day of losses. (At midday, anyway). The market is bleeding red again today as stocks continue to inch closer to those all-important September lows. With no major earnings or economic news on the plate, investors seem to be following through on Friday's sell-off amid a mixture of fear and anxiety about the overall global and economic picture. The U.S. dollar is falling like a rock. Violence continues to plague the Middle East. And corporate accounting is so shady that most CEOs won't even have to touch a bottle of sunscreen this summer. All of this negativity has everyone talking (and hoping) for an oversold bounce higher. Sounds like a job for the plunge protection team. Holy smokes, Batman! We'll have to wait and see!
Who said Enron was a 'no story.'
WorldCom fallout hits European financials - at CBS MarketWatch
Telecoms value hunt loses scent in WorldCom stink - Reuters Company News
Dollar falls; gold rises -AP Breaking News
(06-26) 04:51 PDT LONDON (AP) -- The U.S. dollar fell Wednesday against other major currencies in European trading. Gold prices rose. The euro was quoted at 98.97 cents, up from 96.94 cents late Tuesday. The euro rose as high as ...
I hope this message gets out. O'Neil is not one of my favorite messengers, but someone needs to explain this and clean it up to get confidence back.
Trading stopped on World Com .
Just about anything is possible at this point. Is WCOM the last in a series of frauds? I don't think so. IBM, GE or JPM? We don't know where it will end. I just don't think that the last shoe has fallen yet, but WCOM is a biggy that's for sure.
Richard W.
My question is: "Why is it so evil to manipulate a companies financials in the private sector, when it is condoned as good policy in the government sector"? The Answer. It isn't. The banking and monetary system is as phony as a three dollar bill. All fiat systems have failed throughout history. Greed and dishonesty have always ruled and destroyed the scheme.
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