Inflation hottest in two years, output solid By Mark Felsenthal
58 minutes ago
WASHINGTON (Reuters) - Consumer prices rose the most in more than two years in November as energy costs surged and a host of other prices marched higher, damping prospects of further interest-rate cuts from the Federal Reserve.
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At the same time, production at the nation's mines, factories and utilities rose a stronger-than-expected 0.3 percent last month, suggesting the economy may have a bit more steam than many analysts had thought.
The Labor Department said on Friday that the consumer price index jumped 0.8 percent in November, the biggest gain since September 2005, as energy costs leaped 5.7 percent.
Even stripping out fast-rising food and energy prices, the so-called core CPI rose a relatively steep 0.3 percent, the largest increase since January and ahead of the 0.2 percent rise expected on Wall Street.
"It puts the Fed in a little bit of a bind and people have to question how aggressive the Fed can be in cutting rates if inflation is rearing its ugly head," said Firas Askari, head currency trader at BMO Capital Markets in Toronto.
U.S. stocks and government bond prices fell while the dollar rose against major currencies as traders saw the data suggesting slimmer chances of further rate cuts from the Fed, which has lowered borrowing costs by a percentage point over the past three months. The Dow Jones industrial average (.DJI) closed down 178 points, or 1.3 percent.
"All of these dovish, weak-money individuals out there screaming for rate cuts really need a bucket of cold water in the face because if the Fed goes down that path we may have a bubble in the CPI," said Michael Darda, chief economist at MKM Partners in Greenwich, Connecticut.
GASOLINE ON THE FIRE
Gasoline prices rose 9.3 percent last month, the steepest climb in half a year. Over the past 12 months, gasoline costs are up 37.1 percent, the biggest one-year gain since September 2005.
However, the increase in consumer prices was broadly based.
Apparel costs rose 0.8 percent, medical care prices increased 0.4 percent and owners' equivalent rent -- a gauge of the cost of home ownership that accounts for nearly one-quarter of the overall CPI -- gained 0.3 percent.
Overall inflation rose 4.3 percent from November 2006, the steepest 12-month gain since June 2006, while core inflation rose 2.3 percent over the past 12 months, the biggest rise in seven months. During the first 11 months of 2007, inflation rose at a 4.2 percent annual rate, compared with 2.5 percent for all of 2006.
The report on November consumer prices followed producer price data on Thursday that showed an unexpectedly steep 3.2 percent climb, the biggest increase in 34 years.
Inflation in the 13-nation euro zone was also on the rise last month, with prices up 3.1 percent year-on-year, the steepest gain in six and a half years and a reminder that the Fed is not the only central bank struggling to tamp down inflation at a time growth is threatening to falter.
The U.S. central bank lowered benchmark overnight borrowing costs by a quarter point to 4.25 percent on Tuesday, the third rate cut since mid-September. The move was a bit of added insurance against the possibility a lengthy housing downturn and tighter credit could tip the economy into recession.
At the same time, policy-makers expressed concern that high energy and commodity prices could fuel broader inflation.
The implied chances of a rate cut at the Fed's next meeting in January, as reflected in prices of interest rate futures, fell to 78 percent on Friday from 98 percent on Thursday.
FACTORY ACTIVITY STIRS
In a separate report on industrial output, the Fed said factory production rose 0.4 percent in November after a 0.6 percent drop in October, indicating the economy retained some resilience despite being hobbled by the housing downturn.
The manufacturing figure was helped by a 1.7 percent rise in motor vehicle and parts production and a 2.1 percent increase in computer and electronics products output.
Excluding motor vehicle production, industrial output was up 0.2 percent in November.
While industrial activity last month was stronger than economists had expected, the Fed revised its measure of October output downward, saying production dropped 0.7 percent and not 0.5 percent as originally reported. It was the largest drop since October 2005.
"While the industrial production data are encouraging ... less than half of manufacturing industries appear to be growing," said Cliff Waldman, economist for the Manufacturers Alliance/MAPI. "The economic climate remains treacherous."
(Additional reporting by David Lawder)
Dollar lets give the baht a rest
This might slow the Fed down a bit, the down side I see is when something that looks like good news for dollar holders I still don't see the baht moving.
We think we have it bad I wouldn't want to trade places :
http://www.iht.com/articles/2007/12/14/ ... queeze.php
http://www.iht.com/articles/2007/12/14/ ... queeze.php
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JimboPSM
- udonmap.com
- Posts: 3581
- Joined: July 4, 2005, 3:23 pm
- Location: Isle of Man / Bangkok / Udon Thani
It's been a tough few years for our US members, however there have been quite a few articles that are positive about the prospects for the USD over the last few days.
This one on BBC business is fairly typical: http://news.bbc.co.uk/2/hi/business/7175449.stm
This one on BBC business is fairly typical: http://news.bbc.co.uk/2/hi/business/7175449.stm
However, before anyone starts celebrating, remember that the USD/THB rate is still being "managed" by BoT - so this may not change anything2008 - the return of the dollar?
By Ben Morris
Business reporter, BBC News
It caused trade friction with China, was rejected by Indian tourist attractions and a US rapper, but analysts think that after a turbulent 2007, the US dollar could be in for a calmer year.
It became clear last year to many Americans that their currency was not as valuable as they once thought. Those on holiday in Europe would have found their trip expensive.
Indian tourist authorities said they would no longer accept dollars for entrance to the Taj Mahal. And at home rapper Jay-Z waved a wad of euros in a music video.
The dollar's slide began last summer when the scale of the crisis in US mortgage industry started to become clear.
Record lows were hit against the euro through the autumn as warnings about a US recession became more frequent and the US Federal Reserve started to cut interest rates. By late November it had fallen to a low of $1.4858 per euro.
Despite regaining some ground in December the dollar still fell 8% against the euro for the year, leaving many wondering whether the greenback could maintain its position as the world's most important currency.
Worst over?
But now many in the currency markets think the worst might be over.
"A lot of bad news is already priced into the dollar. It's elsewhere that the shocks could come from, perhaps from the European Central Bank, or the Bank of England," says David Bloom, chief currency strategist at HSBC in London.
Mr Bloom expects traders to recognise that the dollar is now relatively cheap. That would prompt a rebound and he thinks the US currency could end the year at $1.35 per euro.
Rabobank's senior currency strategist, Jeremy Stretch, also thinks that after some early punishment, the US currency could recover by the end of the year.
Over the next few months he says it could go as low as $1.50 per euro as traders fret about the US sliding into recession. But by the year end he is predicting the dollar back to around $1.30.
"The euro is heavily overvalued and we'll find the euro zone economies turning down this year," Mr Stretch says.
Corporate relief
A reversal of fortune for the dollar will be a relief for companies that export to the United States.
Louis Gallois, the head of Airbus parent company EADS, describes the dollar as his company's main problem and he is now considering moving production away from Europe.
British engineering group Rolls-Royce has experienced similar problems.
Like Airbus, a large amount of its sales are in dollars, but its manufacturing base is in the UK. So the weak dollar hit profits and was partly behind a plan to close a UK-based plant.
Battle with China
But the biggest political trouble last year was caused not by the dollar's weakness, but by its strength, particularly against the Chinese yuan or renminbi.
US politicians accused China of deliberately keeping its currency weak, which they said gives Chinese manufacturers an unfair advantage and causes job losses in the US.
Repeated trips by US officials to Beijing and loud criticism from Congress only won a modest appreciation in the Chinese currency.
Candidates in the race to become Presidential nominees have picked up on the sense of foul play.
Several, including Democrat John Edwards and Republican Mike Huckabee, would like to more action to protect US jobs from overseas competition.
Sterling under pressure
While the battle continues over the Chinese currency, US tourists visiting London might get some relief in 2008.
The chief currency strategist at Bank of New York Mellon, Simon Derrick, says the situation is looking ominous for the pound.
To him the UK trade deficit looks alarming and he calculates that, for the size of the population, it's actually worse than America's.
Add to that a weakening housing market and further cuts in interest rates and sterling could in for a sharp fall this year.
So, perhaps 2008 will be the year of soggy sterling and the return of the dollar. We may even see Jay-Z proudly waving the greenback.
I'm beginning to beleive there is no satisfying this beasts hunger 200Billion Plus didn't do it. Really believed this was the right track, didn't make it 24 hours.
Dollar Falls to Record Low on Concern Fed Package Won't Succeed
By Ye Xie and Gavin Finch
March 12 (Bloomberg) -- The dollar fell to a record below $1.55 per euro on concern that the Federal Reserve's plan to provide funds to banks won't be enough to break the gridlock in money-market lending and stem credit losses.
The U.S. currency erased more than half of yesterday's 1.6 percent rally versus the yen, the biggest in six months, which came after the Fed said it would extend $200 billion of credit to financial institutions to spur lending. Traders bet the Fed will cut rates by as much as three quarters of a percentage point next week to avert a recession, while the European Central Bank keeps borrowing costs unchanged.
``It's difficult for the dollar to gain traction,'' said Paresh Upadhyaya, who helps manage $50 billion in currency assets at Putnam Investments in Boston. ``The Fed is probably running out of options; the market is fixated on interest-rate differentials, which are clearly negative for the dollar.''
The dollar fell to $1.5504 per euro, the weakest since the euro's 1999 debut, and traded at $1.5492 at 10:12 a.m. in New York, from $1.5338 yesterday. The previous historic low was set yesterday. It dropped to 102.32 yen from 103.42, within one yen of an eight-year low. The euro traded at 158.59 yen from 158.61.
Euro gains were limited after Luxembourg Finance Minister Jean-Claude Juncker said he is ``very vigilant'' on the euro in current circumstances and that exchange rates should reflect fundamentals. He spoke to reporters in Brussels.
Gulf Pegs
The yen climbed against major currencies, including a 1.3 percent rally versus South Africa's rand, as a government report showed Japan's economy grew an annualized 3.5 percent last quarter, faster than the 2.3 percent median forecast of economists surveyed by Bloomberg News.
Forward contracts to buy United Arab Emirates dirhams rose the most in two weeks after Economy Minister Sultan Bin Saeed Al Mansouri said the dirham's dollar peg is ``contributing'' to record inflation.
A Qatari official denied in a telephone interview that Gulf central bankers will consider dropping the dollar peg when they meet next week. Gulf countries are under pressure to revalue their currencies or drop dollar pegs after the U.S. currency fell 10 percent against the euro last year and the Fed cut rates. The weaker dollar boosts the cost of imports from Europe, while Gulf states have to follow rate cuts, stoking inflation.
The euro extended its gains against the dollar earlier after a European Union report showed industrial production in the region increased for the first time in three months in January. It rose 0.9 percent from the prior month, more than twice the rate forecast by economists surveyed by Bloomberg.
`Stay Short Dollars'
The euro also rose on speculation ECB President Jean-Claude Trichet will highlight inflation risks today at a press conference. ECB council member Axel Weber yesterday said that he sees ``no room'' to lower rates.
The ECB's main rate is 1 percentage point above the Fed's 3 percent target rate for overnight loans between banks.
Policy makers in the U.S., U.K., Canada, Switzerland and the euro region agreed yesterday on a second round of emergency- loans to curb rising money-market rates. The Fed said it will lend Treasuries through a new lending tool and widen the collateral it accepts to include mortgage-backed securities.
``Read the need for such new measures as being a symptom of what ails the world and not a panacea for its problems,'' said David Simmonds, the London-based global head of currency research at Royal Bank of Scotland Plc, the world's fourth- biggest foreign-exchange trader. ``Stay short dollars.''
Bloomberg Currency Survey
The euro interbank offered rate, or Euribor, for three month euro loans rose for a seventh day, climbing 1 basis point to 4.61 percent, the highest since Jan. 7, the European Banking Federation said today.
The collapse of the U.S. subprime mortgage market has caused losses and writedowns of $190 billion at the world's biggest financial institutions. Concerted action announced Dec. 12 temporarily eased the shortage of cash in money markets at the end of last year.
The dollar will extend its decline against most major currencies in the next six months as the U.S. economic slowdown deepens, a survey of 5,430 Bloomberg users showed.
The Dollar Index traded on ICE Futures in New York, which compares the currency to those of six trading partners, declined to 72.54. It set a record low of 72.462 on March 7.
The synthetic euro, which estimates the European currency's value before its inception in 1999, advanced to the strongest level since at least January 1989, when Bloomberg's data on the measure began.
Traders bet the Fed will cut its target rate as much as 0.75 percentage point on March 18 to keep the U.S. from falling into a recession. The likelihood of a reduction to 2.25 percent was 68 percent, according to futures on the Chicago Board of Trade. The balance of bets is on a cut to 2.5 percent.
To contact the reporters on this story: Ye Xie in New York at Yxie6@bloomberg.netGavin Finch in London at gfinch@bloomberg.net
Last Updated: March 12, 2008 10:16 EDT
Dollar Falls to Record Low on Concern Fed Package Won't Succeed
By Ye Xie and Gavin Finch
March 12 (Bloomberg) -- The dollar fell to a record below $1.55 per euro on concern that the Federal Reserve's plan to provide funds to banks won't be enough to break the gridlock in money-market lending and stem credit losses.
The U.S. currency erased more than half of yesterday's 1.6 percent rally versus the yen, the biggest in six months, which came after the Fed said it would extend $200 billion of credit to financial institutions to spur lending. Traders bet the Fed will cut rates by as much as three quarters of a percentage point next week to avert a recession, while the European Central Bank keeps borrowing costs unchanged.
``It's difficult for the dollar to gain traction,'' said Paresh Upadhyaya, who helps manage $50 billion in currency assets at Putnam Investments in Boston. ``The Fed is probably running out of options; the market is fixated on interest-rate differentials, which are clearly negative for the dollar.''
The dollar fell to $1.5504 per euro, the weakest since the euro's 1999 debut, and traded at $1.5492 at 10:12 a.m. in New York, from $1.5338 yesterday. The previous historic low was set yesterday. It dropped to 102.32 yen from 103.42, within one yen of an eight-year low. The euro traded at 158.59 yen from 158.61.
Euro gains were limited after Luxembourg Finance Minister Jean-Claude Juncker said he is ``very vigilant'' on the euro in current circumstances and that exchange rates should reflect fundamentals. He spoke to reporters in Brussels.
Gulf Pegs
The yen climbed against major currencies, including a 1.3 percent rally versus South Africa's rand, as a government report showed Japan's economy grew an annualized 3.5 percent last quarter, faster than the 2.3 percent median forecast of economists surveyed by Bloomberg News.
Forward contracts to buy United Arab Emirates dirhams rose the most in two weeks after Economy Minister Sultan Bin Saeed Al Mansouri said the dirham's dollar peg is ``contributing'' to record inflation.
A Qatari official denied in a telephone interview that Gulf central bankers will consider dropping the dollar peg when they meet next week. Gulf countries are under pressure to revalue their currencies or drop dollar pegs after the U.S. currency fell 10 percent against the euro last year and the Fed cut rates. The weaker dollar boosts the cost of imports from Europe, while Gulf states have to follow rate cuts, stoking inflation.
The euro extended its gains against the dollar earlier after a European Union report showed industrial production in the region increased for the first time in three months in January. It rose 0.9 percent from the prior month, more than twice the rate forecast by economists surveyed by Bloomberg.
`Stay Short Dollars'
The euro also rose on speculation ECB President Jean-Claude Trichet will highlight inflation risks today at a press conference. ECB council member Axel Weber yesterday said that he sees ``no room'' to lower rates.
The ECB's main rate is 1 percentage point above the Fed's 3 percent target rate for overnight loans between banks.
Policy makers in the U.S., U.K., Canada, Switzerland and the euro region agreed yesterday on a second round of emergency- loans to curb rising money-market rates. The Fed said it will lend Treasuries through a new lending tool and widen the collateral it accepts to include mortgage-backed securities.
``Read the need for such new measures as being a symptom of what ails the world and not a panacea for its problems,'' said David Simmonds, the London-based global head of currency research at Royal Bank of Scotland Plc, the world's fourth- biggest foreign-exchange trader. ``Stay short dollars.''
Bloomberg Currency Survey
The euro interbank offered rate, or Euribor, for three month euro loans rose for a seventh day, climbing 1 basis point to 4.61 percent, the highest since Jan. 7, the European Banking Federation said today.
The collapse of the U.S. subprime mortgage market has caused losses and writedowns of $190 billion at the world's biggest financial institutions. Concerted action announced Dec. 12 temporarily eased the shortage of cash in money markets at the end of last year.
The dollar will extend its decline against most major currencies in the next six months as the U.S. economic slowdown deepens, a survey of 5,430 Bloomberg users showed.
The Dollar Index traded on ICE Futures in New York, which compares the currency to those of six trading partners, declined to 72.54. It set a record low of 72.462 on March 7.
The synthetic euro, which estimates the European currency's value before its inception in 1999, advanced to the strongest level since at least January 1989, when Bloomberg's data on the measure began.
Traders bet the Fed will cut its target rate as much as 0.75 percentage point on March 18 to keep the U.S. from falling into a recession. The likelihood of a reduction to 2.25 percent was 68 percent, according to futures on the Chicago Board of Trade. The balance of bets is on a cut to 2.5 percent.
To contact the reporters on this story: Ye Xie in New York at Yxie6@bloomberg.netGavin Finch in London at gfinch@bloomberg.net
Last Updated: March 12, 2008 10:16 EDT
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LoveDaBlues
- udonmap.com
- Posts: 890
- Joined: December 30, 2005, 3:06 pm
Thailand survived with the baht around 25USD:1 (and lower) for many, many years.
I'm sure the Thai guy cutting sugercane and making 150 baht a day really cares about some expat and his poor exchange rate.
Boo hoo hoo whiners grow up; expats have it better than 99% of our Thai hosts even if the baht goes back to 25:1.
I'm really sick of some of the whiners and their ME ME ME attitude.
Sometimes life throws a curveball; deal with it whiner(s).
I'm sure the Thai guy cutting sugercane and making 150 baht a day really cares about some expat and his poor exchange rate.
Boo hoo hoo whiners grow up; expats have it better than 99% of our Thai hosts even if the baht goes back to 25:1.
I'm really sick of some of the whiners and their ME ME ME attitude.
Sometimes life throws a curveball; deal with it whiner(s).
I have a great idea none of us expats say any thing about the thai baht getting stronger
because if we do we are whinners & complainers and we should just shut our mouths
after all the the great economist LDB said it use to be 25 to 1 here a man so smart he put all his money in one bank and lost a good percentage because he failed to look at the FDIC
which is your money is insured for up to100K so because he lost a lot of money due to his incompetence we all should stop whinning. but he failed to understand we don't have the same control over our money as he did with his. I for one do not like losing 25% of my pension in a currency exchange rate at least in Vegas I get to win a hand once in a while
because if we do we are whinners & complainers and we should just shut our mouths
after all the the great economist LDB said it use to be 25 to 1 here a man so smart he put all his money in one bank and lost a good percentage because he failed to look at the FDIC
which is your money is insured for up to100K so because he lost a lot of money due to his incompetence we all should stop whinning. but he failed to understand we don't have the same control over our money as he did with his. I for one do not like losing 25% of my pension in a currency exchange rate at least in Vegas I get to win a hand once in a while
Frankie most of us made more than 65K a month in our retirement and we got ret/visa
now at 60 or less we no longer qualify for the ret/visa that is just one of our problems
yes it our gov. that screwed it up with spending 12 billion on a war which was a mistake from day 1
also giving money to other country to buy there loyality just to name a few also the price of oil got out of hand every one with a few bucks is buying oil stocks which of course does not help
I personally lose 18k a month in the currency exchange rate now I don't know about you but I could do a lot more things with that money for my family as well as for myself than losing it in a exchange rate.
now at 60 or less we no longer qualify for the ret/visa that is just one of our problems
yes it our gov. that screwed it up with spending 12 billion on a war which was a mistake from day 1
also giving money to other country to buy there loyality just to name a few also the price of oil got out of hand every one with a few bucks is buying oil stocks which of course does not help
I personally lose 18k a month in the currency exchange rate now I don't know about you but I could do a lot more things with that money for my family as well as for myself than losing it in a exchange rate.
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LoveDaBlues
- udonmap.com
- Posts: 890
- Joined: December 30, 2005, 3:06 pm
Is there anything you ever get right? Are you really that dense or just the best put-on in the history of internet forums.aznyron wrote:I have a great idea none of us expats say any thing about the thai baht getting stronger
because if we do we are whinners & complainers and we should just shut our mouths
after all the the great economist LDB said it use to be 25 to 1 here a man so smart he put all his money in one bank and lost a good percentage because he failed to look at the FDIC
which is your money is insured for up to100K so because he lost a lot of money due to his incompetence we all should stop whinning. but he failed to understand we don't have the same control over our money as he did with his. I for one do not like losing 25% of my pension in a currency exchange rate at least in Vegas I get to win a hand once in a while
#1 I never put all my money in just one bank. You pulled that out of your arse unless you can show me a post where I said I had all my money in one bank. You can't you lame-brain because I never said that.
#2 Yes, I did lose some money because of a mistake I made. No one else to blame and I said and admitted as much. However, I never said anyone should stop whining because I lost money.
Again, something you pulled out of your arse. #3 I have a pension too num-nuts so the strong baht causes me a loss of income also. However I'm a big boy and don't think the world revolves around ME ME ME so I don't whine about it. Is everyone from Brooklyn such a cry-baby?
#4 Posters such as Bump are also hurt by the strong Baht but his posts deal with trying to understand the what & why instead of constantly whining about it. It's called being an adult; you can learn from him if you'd take off your whiner bib for a few minutes.
#5 By the way, my post didn't reference anyone specifically. But you chose to attack me? I guess the cry-babies know who they are.
#6 Forget about It. I think you know what that means BB (BrooklynBaby).
I see I made your day I just want to say to you nothing you post holds any water your all garble & B/S I also notice by your interlect you can not debate all you can do is insult. I know & acknowlege
I am not the sharpest knife in the draw but you think you are. and if you read your previous post you will see were you said you lost money in banks for depositing over 100K those are your words not mine smart azz IMO I think your all B/S and just want to pump up your statis quo like your the rich kid who lost a lot of money well I have answer... ***** Text Removed by Mods*****
*******Please lets avoid personal insults and stone throwing******
I am not the sharpest knife in the draw but you think you are. and if you read your previous post you will see were you said you lost money in banks for depositing over 100K those are your words not mine smart azz IMO I think your all B/S and just want to pump up your statis quo like your the rich kid who lost a lot of money well I have answer... ***** Text Removed by Mods*****
*******Please lets avoid personal insults and stone throwing******
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LoveDaBlues
- udonmap.com
- Posts: 890
- Joined: December 30, 2005, 3:06 pm
LOL rich kid not hardly started working at 13. *******Text Removed by Mods********* You said I put all my money in ONE bank; I never said that you did.aznyron wrote:I see I made your day I just want to say to you nothing you post holds any water your all garble & B/S I also notice by your interlect you can not debate all you can do is insult. I know & acknowlege
I am not the sharpest knife in the draw but you think you are. and if you read your previous post you will see were you said you lost money in banks for depositing over 100K those are your words not mine smart azz IMO I think your all B/S and just want to pump up your statis quo like your the rich kid who lost a lot of money well I have answer to you **********
I posted my $$ loss mainly to inform/educate others so they won't make the same mistake as I did.
I must agree with you however.......Text Removed by Mods************
LDB has been attacking me now for 2 or 3 weeks on almost all my post
my etiquette is not up to his standards
I don't end my sentence with a peroid etc
plus every thing I post is challenged like I make this shi.t up
and if I complain about the baht i am a whinner
plus he insulted me on a few occasions
now I can over look that since I know he is a wimp hiding behind a keyboard & monitor
he said he started work at 13 I like to know who hired him at 13
if I recall you had to be 16 yrs of age to get a job
so maybe he a paper route whoopie
but then again it his garble not mine
my etiquette is not up to his standards
I don't end my sentence with a peroid etc
plus every thing I post is challenged like I make this shi.t up
and if I complain about the baht i am a whinner
plus he insulted me on a few occasions
now I can over look that since I know he is a wimp hiding behind a keyboard & monitor
he said he started work at 13 I like to know who hired him at 13
if I recall you had to be 16 yrs of age to get a job
so maybe he a paper route whoopie
but then again it his garble not mine
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Miruku
- udonmap.com
- Posts: 216
- Joined: January 26, 2006, 8:30 am
- Location: Williamstown, Australia & udon Thani
Sorry but I'll give the current "debate" a rest, and try to steer us back on topic by quoting an interesting report on the US dollar from this morning's Truthout.
quote
Dollar's Clout Sinks Worldwide
By Alan Clendenning
The Associated Press
Thursday 13 March 2008
Sao Paulo, Brazil - Antique store owners in lower Manhattan, ticket vendors at India's Taj Mahal and Brazilian business executives heading to China all have one thing in common these days: They don't want U.S. dollars.
Hit by a free fall with no end in sight, the once mighty U.S. dollar is no longer just crashing on currency markets and making life more expensive for American tourists and business people abroad; its clout is evaporating worldwide as foreign businesses and individuals turn to other currencies.
Experts say the bleak U.S. economic forecast means it will take years for the greenback to recover its value and prestige.
Negative dollar sentiment is growing in nations where the dollar was historically accepted as equal or better than local currency - and dollar aversion is even extending to some quarters in the United States.
At the Taj Mahal, dollars were always legal tender, alongside rupees, for entry into the palace. But because of the falling value of the dollar, the government implemented a rupees-only policy a month ago. Indian merchants catering to tourists have also turned bearish on the dollar.
"Gone are the days when we used to run after dollars, holding onto them for rainy days," said Vijay Narain, a tour operator in the city of Agra where the Taj Mahal is located. "Now we prefer the euro. It gives us more riches."
In Bolivia, billboards feature George Washington's image on a $1 bill alongside a bright pink 500 euro note, encouraging savers to turn to the euro to tuck away money earned abroad or sent home in remittances.
"If the dollar's going down ... save it in Euros!!!" say the signs popping up around La Paz for Bolivia's Banco Bisa.
And in neighboring Brazil, the Confidence Cambio money-changing service was the first to start offering yuan so travelers to China no longer have to change the money into dollars first. The service is already a hit because Brazil does big business with China, and lots of Brazilians are heading to the Olympics this summer.
"Now we tell people not to take dollars when they go abroad, it's better to change it directly to the local currency," said Fabio Agostinho, one of the firm's managing partners. "If people leave here with dollars and go abroad, they lose when they exchange them. It's the same thing whether they're heading to China, Europe or even Argentina."
In Manhattan's Bowery district, Billy LeRoy, the owner of Billy's Antiques & Props, prefers payment in euros so he can stockpile the currency for his annual antique buying trip to Paris.
"Whip out dollars at the French flea market now, and they'll shoo you away," he said at his store near apartment buildings where Europeans are snapping up units because they've become dirt cheap. "Before it was like the second coming of Christ, but now they don't want it or if they do take dollars, they're going to take their pound of flesh."
The dollar has steadily eroded in value against the euro and other currencies since 2002 as U.S. budget and trade deficits ballooned, but fears of an American recession and credit crisis have sent the dollar to stunning lows amid predictions the slump will continue for a long time.
The euro traded for a record $1.5625 before declining to $1.5586 Thursday while the dollar dropped below 100 Japanese yen for the first time since November 1995. It traded as low as 99.75 yen before recovering some ground to 101.68 yen. The dollar also recently hit a 10-year low against the Chilean peso, and fell to its lowest level against Brazil's real since the nation floated its currency in 1999.
While low dollar cycles have come and gone for decades, experts caution that it's now much more difficult to predict when this one will end because the euro didn't exist as competition for the dollar before.
During previous U.S. economic downturns, big foreign funds typically snapped up U.S. treasuries, helping to shore up the dollar to a certain degree. But the euro and currencies from other nations are now seen as legitimate options, and interest rates are higher outside the United States - meaning the funds can get better returns on investments elsewhere.
"You have the U.S. still holding this trade deficit, but now you have the possibility of a U.S. led recession, and you have a weakening currency. So it's a very dark outlook for the dollar," said Gareth Sylvester, senior currency strategist with the British firm HIFX Inc., which executed $40 billion in currency trades last year.
Nations that were once seen as incredibly risky for investments - such as Brazil - are now seen as good long-term bets. And countries such as China and Russia, with burgeoning coffers of money to invest abroad, are thought to be shifting some of their reserves or diversifying fresh income to destinations and currencies outside the United States.
It used to be important for most countries "to accumulate dollars as a precautionary element against rainy days, but the accumulation of reserves has become so large in most emerging market countries that the balance is way beyond what's needed for precautionary reasons," said Eliot Kalter, a fellow at Tufts University's Fletcher School of Law and Diplomacy and a former International Monetary Fund official.
While most experts believe the dollar will eventually regain strength, no one is willing to predict when that will happen.
"I think the factors that are affecting the weakness of the dollar will be reversed, but no time soon," Kalter said.
The problem right now, is that "people just don't want to be holding U.S dollars and U.S.-based equities," Sylvester added. "If you are an investor with a million dollars to invest, you look for the highest yield - you're looking at South Africa, Australia, New Zealand."
And it's not only the big time investors that are looking for other options.
In Peru, where savings in U.S. dollars were long a popular hedge against inflation, many citizens are closing dollar accounts in favor of Peruvian soles.
At the same time, businesses like supermarkets, movie theaters and cable TV companies that used to accept dollars are now demanding soles.
Edwin Figueroa, a 29-year-old systems engineer, switched his checking account from dollars to soles seven months ago as the dollar's decline started worrying him. He doesn't think he'll be going back anytime soon.
The Peruvian sol "is stable now," he said. "And maybe in a year, the dollar will even go lower."
unquote
quote
Dollar's Clout Sinks Worldwide
By Alan Clendenning
The Associated Press
Thursday 13 March 2008
Sao Paulo, Brazil - Antique store owners in lower Manhattan, ticket vendors at India's Taj Mahal and Brazilian business executives heading to China all have one thing in common these days: They don't want U.S. dollars.
Hit by a free fall with no end in sight, the once mighty U.S. dollar is no longer just crashing on currency markets and making life more expensive for American tourists and business people abroad; its clout is evaporating worldwide as foreign businesses and individuals turn to other currencies.
Experts say the bleak U.S. economic forecast means it will take years for the greenback to recover its value and prestige.
Negative dollar sentiment is growing in nations where the dollar was historically accepted as equal or better than local currency - and dollar aversion is even extending to some quarters in the United States.
At the Taj Mahal, dollars were always legal tender, alongside rupees, for entry into the palace. But because of the falling value of the dollar, the government implemented a rupees-only policy a month ago. Indian merchants catering to tourists have also turned bearish on the dollar.
"Gone are the days when we used to run after dollars, holding onto them for rainy days," said Vijay Narain, a tour operator in the city of Agra where the Taj Mahal is located. "Now we prefer the euro. It gives us more riches."
In Bolivia, billboards feature George Washington's image on a $1 bill alongside a bright pink 500 euro note, encouraging savers to turn to the euro to tuck away money earned abroad or sent home in remittances.
"If the dollar's going down ... save it in Euros!!!" say the signs popping up around La Paz for Bolivia's Banco Bisa.
And in neighboring Brazil, the Confidence Cambio money-changing service was the first to start offering yuan so travelers to China no longer have to change the money into dollars first. The service is already a hit because Brazil does big business with China, and lots of Brazilians are heading to the Olympics this summer.
"Now we tell people not to take dollars when they go abroad, it's better to change it directly to the local currency," said Fabio Agostinho, one of the firm's managing partners. "If people leave here with dollars and go abroad, they lose when they exchange them. It's the same thing whether they're heading to China, Europe or even Argentina."
In Manhattan's Bowery district, Billy LeRoy, the owner of Billy's Antiques & Props, prefers payment in euros so he can stockpile the currency for his annual antique buying trip to Paris.
"Whip out dollars at the French flea market now, and they'll shoo you away," he said at his store near apartment buildings where Europeans are snapping up units because they've become dirt cheap. "Before it was like the second coming of Christ, but now they don't want it or if they do take dollars, they're going to take their pound of flesh."
The dollar has steadily eroded in value against the euro and other currencies since 2002 as U.S. budget and trade deficits ballooned, but fears of an American recession and credit crisis have sent the dollar to stunning lows amid predictions the slump will continue for a long time.
The euro traded for a record $1.5625 before declining to $1.5586 Thursday while the dollar dropped below 100 Japanese yen for the first time since November 1995. It traded as low as 99.75 yen before recovering some ground to 101.68 yen. The dollar also recently hit a 10-year low against the Chilean peso, and fell to its lowest level against Brazil's real since the nation floated its currency in 1999.
While low dollar cycles have come and gone for decades, experts caution that it's now much more difficult to predict when this one will end because the euro didn't exist as competition for the dollar before.
During previous U.S. economic downturns, big foreign funds typically snapped up U.S. treasuries, helping to shore up the dollar to a certain degree. But the euro and currencies from other nations are now seen as legitimate options, and interest rates are higher outside the United States - meaning the funds can get better returns on investments elsewhere.
"You have the U.S. still holding this trade deficit, but now you have the possibility of a U.S. led recession, and you have a weakening currency. So it's a very dark outlook for the dollar," said Gareth Sylvester, senior currency strategist with the British firm HIFX Inc., which executed $40 billion in currency trades last year.
Nations that were once seen as incredibly risky for investments - such as Brazil - are now seen as good long-term bets. And countries such as China and Russia, with burgeoning coffers of money to invest abroad, are thought to be shifting some of their reserves or diversifying fresh income to destinations and currencies outside the United States.
It used to be important for most countries "to accumulate dollars as a precautionary element against rainy days, but the accumulation of reserves has become so large in most emerging market countries that the balance is way beyond what's needed for precautionary reasons," said Eliot Kalter, a fellow at Tufts University's Fletcher School of Law and Diplomacy and a former International Monetary Fund official.
While most experts believe the dollar will eventually regain strength, no one is willing to predict when that will happen.
"I think the factors that are affecting the weakness of the dollar will be reversed, but no time soon," Kalter said.
The problem right now, is that "people just don't want to be holding U.S dollars and U.S.-based equities," Sylvester added. "If you are an investor with a million dollars to invest, you look for the highest yield - you're looking at South Africa, Australia, New Zealand."
And it's not only the big time investors that are looking for other options.
In Peru, where savings in U.S. dollars were long a popular hedge against inflation, many citizens are closing dollar accounts in favor of Peruvian soles.
At the same time, businesses like supermarkets, movie theaters and cable TV companies that used to accept dollars are now demanding soles.
Edwin Figueroa, a 29-year-old systems engineer, switched his checking account from dollars to soles seven months ago as the dollar's decline started worrying him. He doesn't think he'll be going back anytime soon.
The Peruvian sol "is stable now," he said. "And maybe in a year, the dollar will even go lower."
unquote
Befoer eveyone hits panic mode this isn't the first time this has happened, and in fact at one point was used to stregthen Euro. As for Paulson's portion of supporting a strong dollar, I don't believe it for a second. It would be in mind very hard to do anthign now, but this didn't start yesteday
What they are not saying is the tourism industry and exports are booming in the states, based on a weak dollar. Put some thought into what is really happening here Thailand isn't selling you out. If your American living on a fixed income on dollars anywhere in the world these days. or working for dollars internationally. You are cannon fodder for the Chinese currency. Get used to it it ain't over yet.
Want bitch moan and complain by all means do so, but direct it to the law makers in the states. They may and probably won't listen but at least they cam hear the wheel squeak.
We are always complaining we have no say here guess what we have no say in the states either. The term expat seem to carry a lot with it.
quote]
Dollar's Slump Puts Morgan, Goldman on `Intervention Watch'
By John Fraher and Simon Kennedy
March 13 (Bloomberg) -- The dollar's record-breaking slide may trigger the first coordinated effort to prop up the currency in 13 years, say strategists at Morgan Stanley and Goldman Sachs Group Inc.
The currency today fell below $1.56 per euro and slumped to the lowest level in 12 years versus the yen. That has prompted complaints from European Central Bank President Jean-Claude Trichet and Japanese Finance Minister Fukushiro Nukaga. U.S. Treasury Secretary Henry Paulson said today he backs a ``strong dollar'' and refused to elaborate when questioned at a press conference in Washington.
The challenge for policy makers is fighting the $3.2 trillion-a-day currency market while the Federal Reserve cuts interest rates and the U.S. economy falters. With traders increasing bets on a weaker dollar, the Group of Seven nations may be compelled to act, some strategists said.
``We're on an intervention watch,'' Stephen Jen, Morgan Stanley's London-based head of foreign-exchange research, said in a telephone interview today. ``While I don't think we have reached the threshold yet, the argument in favor of it is gradually becoming compelling.''
The dollar today dipped below 100 yen for the first time since 1995, when the G-7 last stepped in to prop up the U.S. currency. It's lost 15 percent against the euro since September as the Fed's rate reductions dull the currency's allure. The slide has accelerated in the past two weeks, putting the euro at $1.5624.
Executives and politicians across the world say they're becoming increasingly worried about the dollar's decline.
Watanabe Anxiety
Toyota Motor Corp. President Katsuaki Watanabe said on March 7 the stronger yen is making conditions ``tough'' for the carmaker. Germany's MTU Aero Engines Holding AG, the largest independent provider of jet-engine maintenance, said today that the dollar's drop may ``cancel out'' the company's growth in euro terms this year.
The U.S. currency's drop may also infect other markets by further weakening confidence in U.S. assets, said Jim O'Neill, chief economist at Goldman Sachs. Morgan Stanley's Jen said the weaker dollar is already spurring higher commodity prices.
``The dollar's fall will worry other markets, which are so fragile right now,'' O'Neill said in a telephone interview today. ``Intervention will definitely be on the minds of policy makers.''
The dollar's drop accelerated after a Carlyle Group Inc. fund moved closer to collapse.
Any action by the G-7 would be the first since its governments united in September 2000 to boost a falling euro. The dollar sank as low as 79.75 yen in 1995 to prompt a rescue then.
Concentrating on China
Since 2002, the G-7 has focused on lobbying China to stop meddling to weaken the yuan while leaving itself with some room to maneuver by noting its aversion to ``excess volatility and excessive movements in exchange rates.''
A united bid to aid the dollar may still not be around the corner. For now, a falling U.S. currency and surging euro are giving support to a weakening American economy by spurring its exports. It's also helping the ECB contain inflation, which is at a 14-year high of 3.2 percent.
Supporting the dollar may also prove futile as its decline partly reflects the Fed's cuts and the ECB's decision not to follow, said Chris Turner at ING Financial Markets.
The Fed has cut its main rate by 2.25 percentage points since September to 3 percent, while the ECB's rate is still at a six-year high of 4 percent.
`Worse' Than Nothing
``Failed intervention is worse than no intervention,'' said Turner, ING's head of currency research in London. ``Policy makers have their hands tied and will defer to the global priority of the Fed slashing interest rates.''
Japan may be more willing to step into markets at a time when its economy is deteriorating and as investors start to bet the Bank of Japan will cut rates by year-end, said Ashley Davies, a currency strategist at UBS AG in Singapore.
``Intervention could easily become consistent with monetary policy,'' said Davies. ``We don't see any major reason why the Bank of Japan cannot resume.''
Eisuke Sakakibara, dubbed ``Mr. Yen'' for his ability to influence the currency during his 1997-1999 tenure as a vice finance minister, is more skeptical. He told a conference in Tokyo on March 11 that the yen is still cheaper than when he sold dollars a decade ago.
``The yen is still pretty much weak against major currencies such as the euro,'' Sakakibara said.
`Excessive Movements'
Policy makers are still stepping up their rhetoric. Trichet said March 10 that he's ``concerned'' about the euro's surge, while Nukaga said today that ``excessive movements'' are undesirable.
O'Neill also senses a shift in the Bush administration's stance. Paulson said on March 7 that ``the long-term fundamentals are strong, and I'm confident they'll be reflected in our currency market.''
O'Neill said G-7 finance ministers may sound an alarm when they convene in Washington on April 11, perhaps by inserting Paulson's statement of support for the dollar.
``A change in the G-7 statement is highly likely in April,'' said O'Neill. ``Whether they can last until then without doing anything is another question.''
Last Updated: March 13, 2008 15:50 EDT
[/quote]
What they are not saying is the tourism industry and exports are booming in the states, based on a weak dollar. Put some thought into what is really happening here Thailand isn't selling you out. If your American living on a fixed income on dollars anywhere in the world these days. or working for dollars internationally. You are cannon fodder for the Chinese currency. Get used to it it ain't over yet.
Want bitch moan and complain by all means do so, but direct it to the law makers in the states. They may and probably won't listen but at least they cam hear the wheel squeak.
We are always complaining we have no say here guess what we have no say in the states either. The term expat seem to carry a lot with it.
quote]
Dollar's Slump Puts Morgan, Goldman on `Intervention Watch'
By John Fraher and Simon Kennedy
March 13 (Bloomberg) -- The dollar's record-breaking slide may trigger the first coordinated effort to prop up the currency in 13 years, say strategists at Morgan Stanley and Goldman Sachs Group Inc.
The currency today fell below $1.56 per euro and slumped to the lowest level in 12 years versus the yen. That has prompted complaints from European Central Bank President Jean-Claude Trichet and Japanese Finance Minister Fukushiro Nukaga. U.S. Treasury Secretary Henry Paulson said today he backs a ``strong dollar'' and refused to elaborate when questioned at a press conference in Washington.
The challenge for policy makers is fighting the $3.2 trillion-a-day currency market while the Federal Reserve cuts interest rates and the U.S. economy falters. With traders increasing bets on a weaker dollar, the Group of Seven nations may be compelled to act, some strategists said.
``We're on an intervention watch,'' Stephen Jen, Morgan Stanley's London-based head of foreign-exchange research, said in a telephone interview today. ``While I don't think we have reached the threshold yet, the argument in favor of it is gradually becoming compelling.''
The dollar today dipped below 100 yen for the first time since 1995, when the G-7 last stepped in to prop up the U.S. currency. It's lost 15 percent against the euro since September as the Fed's rate reductions dull the currency's allure. The slide has accelerated in the past two weeks, putting the euro at $1.5624.
Executives and politicians across the world say they're becoming increasingly worried about the dollar's decline.
Watanabe Anxiety
Toyota Motor Corp. President Katsuaki Watanabe said on March 7 the stronger yen is making conditions ``tough'' for the carmaker. Germany's MTU Aero Engines Holding AG, the largest independent provider of jet-engine maintenance, said today that the dollar's drop may ``cancel out'' the company's growth in euro terms this year.
The U.S. currency's drop may also infect other markets by further weakening confidence in U.S. assets, said Jim O'Neill, chief economist at Goldman Sachs. Morgan Stanley's Jen said the weaker dollar is already spurring higher commodity prices.
``The dollar's fall will worry other markets, which are so fragile right now,'' O'Neill said in a telephone interview today. ``Intervention will definitely be on the minds of policy makers.''
The dollar's drop accelerated after a Carlyle Group Inc. fund moved closer to collapse.
Any action by the G-7 would be the first since its governments united in September 2000 to boost a falling euro. The dollar sank as low as 79.75 yen in 1995 to prompt a rescue then.
Concentrating on China
Since 2002, the G-7 has focused on lobbying China to stop meddling to weaken the yuan while leaving itself with some room to maneuver by noting its aversion to ``excess volatility and excessive movements in exchange rates.''
A united bid to aid the dollar may still not be around the corner. For now, a falling U.S. currency and surging euro are giving support to a weakening American economy by spurring its exports. It's also helping the ECB contain inflation, which is at a 14-year high of 3.2 percent.
Supporting the dollar may also prove futile as its decline partly reflects the Fed's cuts and the ECB's decision not to follow, said Chris Turner at ING Financial Markets.
The Fed has cut its main rate by 2.25 percentage points since September to 3 percent, while the ECB's rate is still at a six-year high of 4 percent.
`Worse' Than Nothing
``Failed intervention is worse than no intervention,'' said Turner, ING's head of currency research in London. ``Policy makers have their hands tied and will defer to the global priority of the Fed slashing interest rates.''
Japan may be more willing to step into markets at a time when its economy is deteriorating and as investors start to bet the Bank of Japan will cut rates by year-end, said Ashley Davies, a currency strategist at UBS AG in Singapore.
``Intervention could easily become consistent with monetary policy,'' said Davies. ``We don't see any major reason why the Bank of Japan cannot resume.''
Eisuke Sakakibara, dubbed ``Mr. Yen'' for his ability to influence the currency during his 1997-1999 tenure as a vice finance minister, is more skeptical. He told a conference in Tokyo on March 11 that the yen is still cheaper than when he sold dollars a decade ago.
``The yen is still pretty much weak against major currencies such as the euro,'' Sakakibara said.
`Excessive Movements'
Policy makers are still stepping up their rhetoric. Trichet said March 10 that he's ``concerned'' about the euro's surge, while Nukaga said today that ``excessive movements'' are undesirable.
O'Neill also senses a shift in the Bush administration's stance. Paulson said on March 7 that ``the long-term fundamentals are strong, and I'm confident they'll be reflected in our currency market.''
O'Neill said G-7 finance ministers may sound an alarm when they convene in Washington on April 11, perhaps by inserting Paulson's statement of support for the dollar.
``A change in the G-7 statement is highly likely in April,'' said O'Neill. ``Whether they can last until then without doing anything is another question.''
Last Updated: March 13, 2008 15:50 EDT
[/quote]
http://www.iht.com/articles/2008/03/14/ ... dollar.php
A lot of truth in this article, or at least I belive so
A lot of truth in this article, or at least I belive so
-
LoveDaBlues
- udonmap.com
- Posts: 890
- Joined: December 30, 2005, 3:06 pm
Mods I apologize for any of my posts that were out of line; I know better and I was wrong. 
It's better if I just ignore certain people which is what I intend to do in the future. When someone, anyone, says something like, "most expats budgeted for the baht at 40:1" and then later says, "oh it was 2-3 of my friends and myself"......well it's just amazing how 'most' expats in reality is 4 people. I don't think it serves anyone to throw around BS as a fact or survey; that's my point in questioning certain posts.
As far as people whining; okay it's their right to do so. It's also my right to think they're acting in a selfish manner. Let's leave it at that.
I think Bump is correct; in the future I'll just laugh at any posts I think are foolish and not respond. I have a feeling a lot of posters are doing just that; guess it's my netiquette that's lacking, sorry.
Actually my first job was delivering papers. My next job was mopping the floors of the local supermarket before school and then bagging groceries after school. I'm not ashamed of either job; I guess some folks are on too high a horse to hold such meager positions.
IMHO it's really sad when a post can't be questioned or an opposing stance taken because someones tender ego will be bruised; boo hoo hoo he's attacking me.......
Lastly, in all my years of posting on Internet Forums I've NEVER made an issue of ANYONE'S education or lack thereof. I don't give a rat's rear how educated someone is or isn't. I DO take issue with posts I feel are misleading, wrong, or just plain BS pulled from someones arse without any thought or research.
It's better if I just ignore certain people which is what I intend to do in the future. When someone, anyone, says something like, "most expats budgeted for the baht at 40:1" and then later says, "oh it was 2-3 of my friends and myself"......well it's just amazing how 'most' expats in reality is 4 people.
I don't think it serves anyone to throw around BS as a fact or survey; that's my point in questioning certain posts. As far as people whining; okay it's their right to do so. It's also my right to think they're acting in a selfish manner. Let's leave it at that.
I think Bump is correct; in the future I'll just laugh at any posts I think are foolish and not respond. I have a feeling a lot of posters are doing just that; guess it's my netiquette that's lacking, sorry.
Actually my first job was delivering papers. My next job was mopping the floors of the local supermarket before school and then bagging groceries after school. I'm not ashamed of either job; I guess some folks are on too high a horse to hold such meager positions.
IMHO it's really sad when a post can't be questioned or an opposing stance taken because someones tender ego will be bruised; boo hoo hoo he's attacking me.......
Lastly, in all my years of posting on Internet Forums I've NEVER made an issue of ANYONE'S education or lack thereof. I don't give a rat's rear how educated someone is or isn't. I DO take issue with posts I feel are misleading, wrong, or just plain BS pulled from someones arse without any thought or research.