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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (24651)	10/30/2007 10:49:21 PM
From: elmatador	Read Replies (1) \| Respond to of 217774

dollar’s fall will be driven primarily by a slowing US economy rather than by developing nations’ reserve diversification, according to Julian Jessop at Capital Economics. “The relentless slide in the dollar against other major currencies, notably the euro, is encouraging speculation that Asian countries and oil producers will step up diversification of their reserve assets out of the US currency, accelerating its decline,” he says. But Mr Jessop is not convinced reserve asset diversification has been – or will be – a dollar driver. “The bigger picture is that the US currency is weak because of relatively poor?economic?fundamentals, notably the huge current account deficit, and because of adverse movements in expected growth and interest rate differentials. “This is far more important even than what Asian or Organisation of the Petroleum Exporting Countries governments decide to do. “Put another way, if US fundamentals were in fact strong and these governments decided to diversify out of the dollar for other reasons, they would find willing buyers and the dollar would probably still strengthen. “When governments talk about ‘diversifying’, this is driven by a search for higher returns rather than a desire to reduce holdings of dollar assets. Reserve managers might influence the speed of the dollar’s decline, but not necessarily its direction.” ft.com