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To: goldsnow who wrote (39267)	8/19/1999 9:22:00 AM
From: long-gone	Read Replies (1) \| Respond to of 116895

UK Press: Ex-boe FX Head Says Bank Should Sell Stlg, Not Gold Aug. 19-MAR--[B] UK Press: Ex-BOE FX head says bank should sell stlg, not gold By Bridge NewsLondon--Aug 19--The debate over whether the UK's monetary authoritiesshould allow sterling to rise unchecked was reignited today by Terry Smeeton, the former head of the Bank of England's foreign exchangedivision. UK Chancellor of the Exchequer Gordon Brown should order thebank to be a "ready seller" of sterling at levels above 95 on itstrade-weighted index, Smeeton said in a letter published in the FinancialTimes. * * *Sterling closed at 103.6 on its TWI Wednesday, so Smeeton clearlybelieves the currency should be forced down from its current levels.In his letter, Smeeton argued Brown should make use of the currentstrong fiscal position by allowing a funding requirement to arise through the sale of sterling. Selling sterling above 95 on the TWI "would have the effect of bringing the pound lower, thereby helping British industry. Thesales of sterling should be funded by the issuance of long gilts, therebyhelping maintain liquidity in the gilts market, an important objective fora leading financial center like London."Smeeton also argued that by selling sterling, and thus boostingforeign exchange reserves, the bank would not have to go through with itscontroversial gold sales."The...rise in foreign exchange reserves...would have the consequenceof reducing the proportion of gold held, destroying any case for goldsales and thereby helping the producing countries."In his few public comments on FX intervention, however, Brown hasconsistently opposed the idea and the bank has yet to intervene to push sterling lower under the current government. EndBridge News, Tel: +44-171-842-4079Send comments to Internet address: gennews@bridge.com futuresource.com

To: goldsnow who wrote (39267)	8/19/1999 3:12:00 PM
From: Rarebird	Read Replies (1) \| Respond to of 116895

Brazil shares fall on political, currency concerns: SAO PAULO, Aug 19 (Reuters) - Brazilian shares opened weaker on Thursday as traders saw scarce demand for stocks amid mounting market concerns over political support for the government's austerity policies and a weakening real currency. Sao Paulo's benchmark Bovespa index (^BVSP - news) of blue chip companies was 0.92 percent lower in early trade on Thursday after Wednesday's sharp 2.4 percent loss. ''There is no motivation to buy shares in the current political situation,'' said one trader. ''(President Fernando Henrique) Cardoso and (Central Bank Chairman Arminio) Fraga are admitting that the situation is bad and they demonstrate their weakness,'' said one trader. Cardoso's waning popularity in recent polls and mounting political opposition have fueled concerns the government may not garner support for the measures needed to stem Brazil's yawning fiscal gap. Pressure on the government to forgive debt and extend fresh loans to Brazil's farmers, peaking in a protest in Brasilia this week, is also weighing on markets, traders said. Cardoso said in a television address on Wednesday night he would not give in on debt pardon and would veto the bill. ''He can go all the way saying he vetoes it, but he needs to have support for that, which he doesn't have,'' said one trader. The real currency (BRBY - news) which fell 1.42 percent on Wednesday, was weaker again on Thursday, fetching 1.915 in early trade, despite Wednesday's Central Bank's intervention and chairman Fraga's promise to remove tax on foreign financial transactions to lure more dollars into the country. The plight of Brazil bodes ill for Argentina Escalating monetary, political stock market problems in Brazil will flow over the border infecting the Argentine economy, which has already incurred significant damage since the beginning of the year when the Brazilian real devlaued 40%. Eventually and inevitably the Argentine will succumb to economic pressures and be forced to devalue the peso.

To: goldsnow who wrote (39267)	8/20/1999 7:52:00 AM
From: Rarebird	Read Replies (2) \| Respond to of 116895

A declining dollar means trouble A weakening currency threatens the boom BY PHILLIP J. LONGMAN Americans have had a great game going these past few years. Workers abroad toiled to produce everything from automobiles to wine, cheese, and toys, and dutifully sent container ships full of the stuff to our shores. In return, we offered them slips of paper, with words like "Treasury bond" and "stock certificate" printed on the top. And the really amazing part was, the more of this paper we created, the more cool stuff–from Lexus GS 400s to bottles of cuvée–foreigners were willing to trade for scraps of paper. In the first three months of 1999, Americans consumed $68.6 billion more in foreign-produced goods and services than they shipped abroad, creating an all-time-record trade deficit. Yet the United States also managed to sell foreigners $238 billion in corporate bonds and stock certificates, more than making up the cash shortfall. Why were foreigners so eager to make such a trade? Because like all the bulls on Wall Street, they believed in the promise of America's "new economy." Foreigners were so eager to acquire U.S. financial assets that they bid up the price of the dollar over the past 41/2 years, even though under normal conditions, a country running a huge trade deficit is punished by a depreciating currency. The recent declines in the value of the dollar suggest that the United States finally may be paying that price. Since early July, the dollar has fallen sharply. The greenback is down some 7 percent against the European Community's euro and off 5.5 percent versus the Japanese yen. Why is this happening, and what could it mean for the U.S. economy? Most market observers believe that the dollar's decline stems from two fundamental changes. First, inflation, rising interest rates, and high stock prices in the United States are making investment in U.S. financial assets increasingly risky. Second, recovery in Asia and Europe now means there are more-promising returns available from investments in those regions. The falling dollar is a strong signal that not only foreigners but Americans themselves are starting to pull money out of the U.S. stock market and put it to work elsewhere. Vicious cycle. Notes David Jones, chief economist for Aubrey G. Lanston & Co., the decline in the dollar may signal a turning point for the U.S. economy and for the stock market. Stocks were "priced to perfection in large part because of the strong dollar," says Jones, and because investors expected money from abroad would keep flowing into U.S. equities, supporting ever higher prices. The weakening dollar calls this assumption into question. Moreover, the decline itself could set off a vicious cycle, since it also gives foreign investors an extra reason for not investing here: A drop in the value of the dollar against their home currencies can wipe out any returns they realize here. The dollar's weakness is also ominous for Americans on Main Street. If a declining dollar triggers a sell-off on Wall Street, consumer demand would severely contract. And with foreigners no longer so willing to trade real goods and services for financial paper, Americans will have to either dramatically reduce their consumption of imports or ship much more domestic production abroad. Either way, if the decline in the dollar continues, it will cause a dramatic shift in the U.S. economy. usnews.com