Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Chispas who wrote (96468)	11/29/2003 6:34:22 AM
From: Chispas	Read Replies (1) \| Respond to of 116752

Lehman Says Dollar `Unattractive' on Low U.S. Rates ................................... Nov. 28 (Bloomberg) -- Lehman Brothers Holdings Inc., the fourth-biggest U.S. securities firm, said the dollar remains ``unattractive'' to investors, partly because the Federal Reserve is keeping interest rates at a 45-year low. The dollar fell to a record $1.1990 versus the euro today and is down about 12 percent this year against the euro. It also has declined compared with the British pound, Australian dollar and Swiss franc. The Fed's target rate of 1 percent is half the level of the European Central Bank's benchmark. Central banks in the U.K. and Australia raised rates this month to 3.75 percent and 5.25 percent respectively. Combined with the risk of terrorism and a record current-account deficit, the Fed is deterring some investors from buying American assets, Lehman said. ``By insisting that rates remain at historic lows for some time, the central bank has only added to the doubts about the U.S. recovery,'' Lehman said in its weekly Global Foreign Exchange and Local Market Strategies report. ``If, on the other hand, the Fed begins hinting rates will head higher than we think, it could prove an important turning point for market confidence in the U.S. -- maybe not enough to turn the dollar's trend, but certainly enough to slow it down,'' Lehman said. The dollar traded at $1.1976 per dollar at 10:17 a.m. in London, headed for its third consecutive week of declines. It's down 3.2 percent in November. `Grinding Lower' Demand for the U.S. currency has waned on concern the country won't attract enough capital to counter its record current-account deficit, even as the economy grows at the fastest pace since 1984. The gap widened to a record $138.7 billion in the second quarter. The euro region has a surplus, as does Japan. ``The dollar still should grind lower in the months to come,'' said Peter Clay, a currency strategist in Sydney at ABN Amro Holding NV. ``It's got a huge funding problem.'' In a separate report this week, Merrill Lynch & Co. said it expects the yen to strengthen against the dollar next year more than it previously forecast. The yen will end 2004 at 90 per dollar, up from an earlier prediction of 98, Merrill said in a note to clients on Wednesday. It was trading at 109.23 per dollar at 10:18 a.m. in London and has risen 8.5 percent against the U.S. currency this year. Merrill, the world's biggest securities firm by capital, also expects the record U.S. current-account deficit to push the dollar lower against a range of currencies next year including the euro, the pound and the Swiss franc. Last Updated: November 28, 2003 05:20 EST