Sunday, November 07, 2004

Dollar expected to fall amid China's rumoured selling

The first rumblings of the second great depression? I only took intro to Macroeconomics, so I don't know all the ins and outs of world financial markets, but a tumbling dollar isn't the greatest thing to look forward to. On the other hand, we can all sneak across the Mexican border, work as nannys and cleaners, then wire the money back to the US to pay off the defecit.....

"However, the market has been rife with rumours that the latest wave of selling has been led by foreign governments seeking to cut their exposure to US assets.

India and Russia have reportedly been selling US assets, as well as petrodollar-rich Middle Eastern investors.

China, which has $515bn of reserves, was also said to be selling dollars and buying Asian currencies in readiness to switch the renminbi's dollar peg to a basket arrangement, something Chinese officials have increasingly hinted at. Any re-allocation could push the dollar sharply lower and Treasury yields markedly higher."

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