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To: sammaster who wrote (57394)	1/11/2001 10:55:05 PM
From: pater tenebrarum	Respond to of 436258

the dollar is only falling vs. the Euro, and those currencies that were trading in tandem with the Euro (Swiss Franc, Pound, Ozzie buck and a few others). it is however rising against the Yen. i surmise that the Euro carry trade is ending and an attempt is afoot to revive the Yen carry. at least ONE of the major currencies MUST fall against the USD to keep the capital flows needed to balance the current account deficit flowing. should the Yen begin to rise in tandem with the Euro, a crisis would erupt immediately imo. the rationale given for the Euro's strength is that Euro zone growth is eclipsing US growth now (true, it is). however, it is really hot money flows determining currency relations these days. so you are correct inasmuch as European based institutions are likely repatriating at this point, while Japanese institutions are doing the opposite, i.e., resuming Japanese capital exports. a possibility that could upset the balance is a dollar BK against the Euro if the carry unwinds in crash like fashion, concurrently with a renewed economic crisis across Asia brought on by the competitive devaluations now underway in the region. interestingly, it is China that looks once again most stable in this regard with its inconvertible currency.