Macavity: Investors should expect further dollar depreciation.
Oga, I sold Yen -the day before yesterday- for a profit and went back to the USD.
I'm prepared to jump back to the Yen soon. High oil prices will sink the Yen. The next round of strike in Nigeria (slated for next week with undetermined end in sight) will raise oil further up (USD60 perhaps?) and, as a consequence, the Yen to fall against the USD then perhaps I should jump in again.
Besides, Obasanjo is under frank destabilization and very likely won't see the end of his term.
Cheers
Elmat
US dollar
Published: October 21 2004 13:27 | Last updated: October 21 2004 13:27
news.ft.com
Has the US dollar embarked on a renewed downward trend? On Thursday the dollar's trade-weighted index fell to an eight-month low, with concerns over the US current account deficit firmly in focus.
The deficit is 5.7 per cent of gross domestic product, and still growing. Economists estimate that a 20-25 per cent nominal dollar depreciation would be required to narrow the gap by 2 percentage points.
While foreigners remain willing to finance the deficit the adjustment process may be postponed. However, with capital inflows declining, the US is increasingly dependent on foreign central banks for funding. Their appetite may be waning. For the first time since August 2003, the four-week moving average of US bond purchases by foreign central banks has turned negative.
John Snow, US Treasury secretary, continues to pay lip service to a strong dollar. Comments on the deficit from Federal Reserve officials, however, have increased recently. Some have been explicit, saying the dollar is headed lower. IDEAglobal, the research group, suggests some Fed officials believe that delaying adjustment risks a disorderly dollar decline and favour “talking” the dollar lower. But Alan Greenspan, Fed chairman, does not favour this approach.
The current account deficit is not a new problem. But it is growing, the willingness to fund it may be declining, and policymakers appear increasingly concerned. Investors should expect further dollar depreciation. |
