Word: dollar
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Dates: during 1970-1979
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...stunned commentators and ordinary citizens abroad. Disappointed with U.S. inaction on energy, European political leaders generally were happy to see Energy Secretary James Schlesinger go. They cheered the firing of Treasury Secretary W. Michael Blumenthal, who has never lived down his brief willingness a year ago to allow the dollar to fall to its lowest levels ever. They applauded his replacement by G. William Miller, who as chairman of the Federal Reserve Board showed a tough-minded determination to protect the dollar by tightening up on money policy, even at the risk of slowing the U.S. economy. One high West...
Countless thousands of foreign investors expressed their lack of confidence in Carter in more concrete form by dumping dollars and buying gold. In short, they were voting with their money. "We were waiting for an energy program, and the exchange rate reflects the absence of one," commented Leonida Guadenzi, vice president of the Milan Exchange, where the dollar fell sharply against the Italian lira. Added one Milan trader: "When Carter speaks, the dollar plummets...
While gold is psychologically important, the fate of the dollar is far more vital to the U.S.−and the rest of the non-Communist countries, which use the greenback to settle most international trade deals. Even before Carter's actions last week, the dollar had been slipping, as some financially important countries, including Saudi Arabia, sold American currency from their monetary reserves in exchange for West German marks and British pounds...
When news bulletins of the Cabinet shuffle reached Europe, the telephone on the desk of Treasury Under Secretary Anthony Solomon, who handles day-to-day defense of the dollar, began ringing incessantly. European central bankers and Finance Ministry officials demanded to know what was going on. Solomon could not provide inside information on what would happen next. Deprived of top-level advice, foreign money managers followed their instincts and bought some dollars to head off any major upset in the international exchange markets. The Federal Reserve Board also poured some $2 billion into the foreign exchanges to buy dollars...
...Europeans, who equate the strength of a currency with the prestige of a country, the weak and wavering dollar is symbolic of the Carter Administration. A declining dollar also does serious damage to the U.S. economy by pushing up the price of imports and making it more expensive for U.S. companies to operate abroad and thus directly challenge their European and Asian competitors. Unless Carter rallies and the U.S. demonstrates real signs of strength, the dollar will continue to tremble, and investors abroad will live by their old watchword: "In gold we trust...