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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: X Y Zebra who wrote (3137)	8/30/2001 10:22:58 PM
From: Robert Douglas	Read Replies (2) \| Respond to of 3536

If I understand you correctly, then are we saying that currency traders, in a way, become policy setters. However, I understand what you say about the extremes that this inertia can create. Well, in a word, yes. Currency traders can go a long way toward determining the exchange rate. And we're not talking just about speculators. Any company that has sales in other countries is, in effect, a currency trader and most of these are momentum players. If a currency is rising, they take a position so as not to have to buy later at a higher price. You might remember how the Clinton administration had an obsession with bond traders. The same is true with currency traders. You don't want to upset them, because they can do lots of damage. That's why the present administration won't say anything bad about the level of the dollar, even though they most certainly want a decline in the dollar. There has been an enormous multi-year speculation in the dollar. Even a small reversal coupled with the enormous current-account deficit could provide for some interesting times in the currency markets.