Word: dollarization
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Dates: during 1980-1989
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...bond prices suffered their worst one-day drubbing in more than five years. But the Dow bounced back by 42.47 the next day and closed on Friday at 2326.15, up 34.58 points for the week, while bond prices also recovered much of their loss. In Tokyo the U.S. dollar, which has lost about 30% of its value against the yen in the past 18 months, tumbled quickly from 145 to the dollar to 142.5 before rebounding to finish the week at 143.6. In Paris, the dollar dropped nearly 2% against the French franc in a matter of hours, but later...
Amid the welcomes there were a few voices of caution. Henry Kaufman, a partner at the Salomon Brothers investment firm and one of Wall Street's most famed Cassandras, warned that Greenspan's appointment in the short haul "is a negative both for the dollar and for interest rates." Allen Sinai, chief economist at the Shearson Lehman Brothers investment house, noted that Greenspan "does not have much experience in international finance...
...that Volcker went along with a gradual reorientation of Fed policy toward pepping up economic growth. In 1986 the Reserve Board let the basic money supply grow at a 16% annual pace, far above Volcker's original target limit of 8%. That money spurt, along with the weakening dollar, has let inflation edge up this year and may have sown the seeds of future rises that could nullify part of Volcker's celebrated victory against spiraling prices...
...markets adjusted to the shock of Volcker's impending absence, a new Fed- watching game had already begun. Every recent utterance by Greenspan was being scanned for inklings of his current views on inflation, interest rates and the dollar's value. By and large, Greenspan kept mum in anticipation of his Senate confirmation hearings in mid-July...
Even so, some observers tried to make much of the fact that two weeks ago in Chicago Greenspan had remarked that "over the long run" the value of the battered dollar would go "significantly lower." At last week's press conference announcing his appointment, however, he noted cautiously that there was "evidence" that the dollar's fall had bottomed out. Observed Japanese Central Banker Ohta: "Mr. Greenspan made his remark about ((the falling dollar)) when he was an economist, not when he was chairman-designate. So we do not have any concern about it." In his new vein of bankerly...