Word: greenbackism
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...surprisingly, these huge dollar holdings are a source of considerable anxiety for capital markets. Any hint that Asian countries in general-and China in particular-are going to sell their dollars causes the greenback to sink and sends treasury rates higher. There is evidence that governments are worried about the size of their caches. Foreign holdings of dollar-based assets doubled from $1 trillion to $2 trillion from the end of 2001 through to the spring of 2005, but since have increased less than 10%. China, which must continue to buy dollar assets if it wishes to keep its currency...
...speaking in favor of stable monetary exchange rates, the President offhandedly observed that nonetheless "there could still be some lowering of the ((U.S. dollar's)) value." Money traders interpreted that as a renewed attempt to talk the dollar down in order to reduce the U.S. trade deficit, and the greenback promptly sank. White House Spokesman Marlin Fitzwater issued two clarifications asserting that the President wanted the dollar to stabilize. Reagan will have to do better than that at a summit with Gorbachev, lest the Soviet leader steal all the credit for the missile agreement that should be the proudest international...
EUROPE: HOLD ON It's the euro that has so far borne the brunt of the dollar's decline: it rose about 10% last year against the greenback. A stronger currency makes European exports more expensive for foreign buyers. But that hasn't prevented Germany from notching up its biggest trade surplus since the fall of the Berlin Wall 16 years ago. The good news is that buoyant exports have boosted business confidence in Europe's biggest economy and led to an unexpectedly strong increase in domestic demand. German companies appear to be hiring again: in December the number...
Some contend that the greenback may already have been oversold. Currency strategist Mackinnon says he urges caution when the market sentiment is all one way. And in New York City, Ken Goldstein, an economist at business research organization the Conference Board, reckons: "All we're seeing is another one of those short-term moves that will peter out in weeks or months...
...been rattled despite the worsening political atmospherics. The Dow Jones index, the most-watched barometer of the U.S. stock market, neared a six-year high last week, and the dollar has been firm, despite the massive trade deficit which, in theory at least, is eventually supposed to drive the greenback's value down. Moreover, at a moment when the U.S. needs China's help in the U.N. Security Council to bring Iran's nuclear program to heel, U.S. President George W. Bush is plainly eager to finesse the trade issue as best he can. Asked a leading question...