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Strategies & Market Trends : News Links and Chart Links

SPXL 212.36

-3.3%

Nov 6 4:00 PM EST

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To: Les H who wrote (3374)	10/28/2002 12:38:18 PM
From: Les H	Read Replies (1) of 29592

What about the Fed’s Latent Concern with the Falling Dollar? According to the minutes of the May 7 FOMC meeting, the Fed referred to emerging inflation concerns stemming from various sources including the falling dollar. By the May 7th meeting, the Fed’s broad dollar’s trade-weighted index had fallen 1.4% from its late January high. Today, the Index is down more than 3%, from its January high. Thus, if the Fed were concerned when the dollar was off 1.4%, it is definitely more preoccupied with the dollar’s accumulated losses doubling thereafter. The Fed's willingness to participate in the June 28 coordinated central bank intervention to cap the rising yen, is also a tacit endorsement to stabilize the falling dollar. The June 28th intervention reflects the increased preoccupation by global monetary authorities with the fall in the world’s reserve currency—the dollar, which still accounts for 74% of the FX armory of industrialized nations’ central banks, compared to 13% for the euro. Thus, it is nonviable for these cenbanks to let a decline in the currency go unchecked. Asian central banks are particular owners and “buyers” of dollars. forexnews.com

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