Europe,US policymakers seem relaxed on dollar fall

[54anickel]

Is someone doing a "Snow job" here? There's this first article about everyone being hands off, then the 2nd article that has rumors of ECB interventions.
Wazup?

http://www.forbes.com/work/newswire/2003/12/10/rtr1176245.html

FRANKFURT, Dec 10 (Reuters) - Top policymakers in Europe and the United States have taken a hands-off approach in public to the tumbling dollar, putting no brake in its path in the past week.

European Central Bank Governing Council member Ernst Welteke was the latest, expressing calm on Wednesday over the dollar's sharp retreat that has pushed the euro up 5.3 percent in one month to fresh record highs for eight straight days.

"The euro's foreign exchange rate is not far removed from its long-term average and it should not harm competitiveness," Welteke said at the Bundesbank's annual news conference.

Certainly, both sides of the Atlantic can reap benefits from the dollar's decline.
-----------------------------------------
http://www.forbes.com/home_europe/newswire/2003/12/10/rtr1175619.html

FRANKFURT, December 10 (Reuters) - The European Central Bank said on Wednesday it had no comment on market reports of central bank intervention in the foreign exchange markets.

"The ECB does not comment on market rumours," an ECB spokesman told Reuters

[brainshrub]

1. The implications of this are to scarey to talk about right now. (nt)

[54anickel]

2. Would it help if I got out the tinfoil?

[Gin]

3. how low does the the dollar have to go before it becomes a serious

concern?

[54anickel]

4. Don't know if you can set an exact value. It really comes down to when

confidence in the dollar is gone. That might be why they are professing to be so nonchalant (sp?) about it.
Got to keep everyone believing everything is OK.
Maybe someone else could give you a better answer.

Here's a site you may want to checkout.
http://www.financialsense.com/index.html

Check out the articles under the New this Week section.
Also the Market Wrapup Section, archives by each author.
This one's pretty good off that site as well.
http://www.financialsense.com/Market/archive/2003/1118.html

[bahrbearian]

5. Didn"t Iraq trade in Ero's

If other Oil countries traded in Ero's what would happen ?

[54anickel]

6. In a round about way thru the UN food for oil progam, yes they were

selling oil for Euros, not sure if Saddam had gotten around to it prior to the sanctions.
As far as what would happen, that depends on which country your in and what currency your debts are in. China is selling off their dollars from bonds and trade and stocking up on oil, not sure what they are up to.

http://www.financialsense.com/Market/archive/2003/1118.html
snip>
Most Opec members are Middle East nations, and their purchasing power has declined sharply vis-a-vis their commercial partners thanks to the dollar's fall. Many have euro- or yen-denominated debts, raising their foreign debt servicing costs.

For oil importers, Opec's decision means energy import bills will continue to stay hefty, potentially putting trade balances under pressure and spurring inflation.

This is particularly true in high-growth Asian countries.

As Asian countries align their currencies closely with the dollar and have more yen-denominated borrowings, they face high oil prices and debt servicing costs.

Among many other emerging market oil importers, though, the dynamic is far more benign, thanks mainly to currency appreciation against the dollar.

Turkey's currency, for example, has risen 15 percent against the dollar this year, making its oil purchases that much more affordable.

Chile's peso has climbed 19 percent to a 37-month high. Both countries' dollar-linked debt have become easier to service.

[cliss]

7. Well, they shouldn't be relaxed about it.

This is a crisis of the worst proportion. Someone might say, "what's the problem? The european currencies are going up rapidly. Isn't that good for them?" Well, yes, but it's also bad. Think of all the stuff they have ready to export to the US. Now, the stuff is much more expensive. Americans won't be able to afford it. They'll have to stick with domestic goods.

Also, think of all the millions of Americans who travel to europe and around the world. They won't be able to afford it now. Everything is so much more expensive. They will be forced to stay home instead. All those restaurants, hotels, tourist attractions will be hurting by next summer.

Not good.

[Art_from_Ark]

8. Exports probably won't be affected immediately

if European companies are like Japanese companies that agree on an stable exchange rate with their trading partners that is independent of the sometimes wild gyrations of the speculation-driven currency markets.

And the low dollar might not immediately hurt travelers to Europe who are going with package tours, unless they want to venture out of their bubble and buy stuff at local markets.

Do you remember when the Japanese yen was 78/dollar? It was a boon to me when I went back to the US for a visit and found that things were going for "fire sale" prices just because of the exchange rate. But the price of American goods, or goods valued in American dollars (like imported oil), was not affected much in Japan.