Euroview: Bernanke Unlikely To Halt Dollar's Slide
The U.S. dollar is unlikely to garner any support from Wednesday's FOMC decision, or from Fed Chairman Ben Bernanke's comments, and will remain out of favor for a while longer

Dollar Falls to New Low as Markets Await Fed's Next Move
THE GUARDIAN: Ben Bernanke, chairman of Federal Reserve, expected to maintain loose monetary policy

The US dollar has fallen to new lows against other major currencies, undermined by predictions that the US would continue to resist pressure to raise interest rates.

In early trading, the dollar dropped to its weakest level ever against the Swiss franc, having touched a record low against the Australian dollar overnight. It also hit a four-week low against the yen, while the dollar index, which measures it against a basket of rival currencies, was close to its lowest level since August 2008.

The fall came a few hours ahead of the start of the Federal Reserve's monthly two-day meeting to set monetary policy.

City experts believe that this will be a defining week for the dollar. Ben Bernanke, chairman of the Fed, will for the first time hold a press conference on Wednesday evening immediately after the Federal open market committee has voted. Traders expect no change to the Fed's current loose monetary position. » | Graeme Wearden | Tuesday, April 26, 2011

US Dollar Should Be Replaced by New Global Reserve – Leading Economist

Dollar Rises from Near-record Lows vs Yen after Quake
REUTERS: The dollar rebounded from near-record lows against the yen on Monday, boosted by hedge fund buying as the Bank of Japan's huge infusion into money markets helped ease nervousness triggered by the massive earthquake and tsunami in northeast Japan. >>> Gertrude Chavez-Dreyfuss | TOKYO | Monday, March 14, 2011

Why the Dollar's Reign Is Near an End
THE WALL STREET JOURNAL: For decades the dollar has served as the world's main reserve currency, but, argues Barry Eichengreen, it will soon have to share that role. Here's why—and what it will mean for international markets and companies.

The single most astonishing fact about foreign exchange is not the high volume of transactions, as incredible as that growth has been. Nor is it the volatility of currency rates, as wild as the markets are these days.

Instead, it's the extent to which the market remains dollar-centric.

Consider this: When a South Korean wine wholesaler wants to import Chilean cabernet, the Korean importer buys U.S. dollars, not pesos, with which to pay the Chilean exporter. Indeed, the dollar is virtually the exclusive vehicle for foreign-exchange transactions between Chile and Korea, despite the fact that less than 20% of the merchandise trade of both countries is with the U.S.

Chile and Korea are hardly an anomaly: Fully 85% of foreign-exchange transactions world-wide are trades of other currencies for dollars. What's more, what is true of foreign-exchange transactions is true of other international business. The Organization of Petroleum Exporting Countries sets the price of oil in dollars. The dollar is the currency of denomination of half of all international debt securities. More than 60% of the foreign reserves of central banks and governments are in dollars.

The greenback, in other words, is not just America's currency. It's the world's.

But as astonishing as that is, what may be even more astonishing is this: The dollar's reign is coming to an end.

I believe that over the next 10 years, we're going to see a profound shift toward a world in which several currencies compete for dominance.

The impact of such a shift will be equally profound, with implications for, among other things, the stability of exchange rates, the stability of financial markets, the ease with which the U.S. will be able to finance budget and current-account deficits, and whether the Fed can follow a policy of benign neglect toward the dollar. >>> Barry Eichengreen | Wednesday, March 02, 2011

Dr. Eichengreen is the George C. Pardee and Helen N. Pardee professor of economics and political science at the University of California, Berkeley. His new book is "Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System." He can be reached at reports@wsj.com.

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Ausweitung der Yuan-Menge: China attackiert den Dollar
Dollar- und Yuan-Noten: Drohende Dollar-Dämmerung. Bild: Spiegel Online
SPIEGEL ONLINE: Die chinesische Notenbank überrascht mit einer spektakulären Ankündigung: Die angehende Supermacht will ihren kompletten Außenhandel künftig in Yuan abwickeln, nicht mehr in Dollar. Peking rüttelt an Amerikas Anspruch, die Leitwährung zu stellen - mit gravierenden Folgen für die USA.

Berlin - Es ist unscheinbare Ankündigung, doch sie hat das Potential, das Machtgefüge auf dem Weltwährungsmarkt nachhaltig zu verändern: China stärkt die internationale Rolle des Yuan. Alle Exporteure und Importeure sollen noch in diesem Jahr die Geschäfte mit ihren ausländischen Partnern in Yuan abrechnen können, teilte die Zentralbank am Mittwoch in Peking mit.

Damit werde auf die wachsende Bedeutung des Yuan als weltweite Reservewährung reagiert. "Die Marktnachfrage nach einer grenzüberschreitenden Verwendung des Yuan steigt", erklärte die Zentralbank. Testweise wurde bereits im vergangenen Jahr 67.000 Unternehmen in 20 Provinzen erlaubt, ihre Auslandsgeschäfte in Yuan abzuwickeln. Das Handelsvolumen belief sich auf umgerechnet rund 56 Milliarden Euro.

Jetzt soll die Yuan-Menge ausgeweitet werden, es sollen deutlich mehr Geschäfte in der chinesischen Währung abgewickelt werden - und weniger in der amerikanischen. Chinesische Unternehmen handeln zurzeit oft in Dollar, sie sind dadurch abhängig von den Entscheidungen der US-Notenbank Fed, zahlen bei einem steigenden Ölpreis drauf und müssen höhere Transaktionsgebühren als nötig berappen. Das soll sich jetzt ändern.

Langfristig will die Volksrepublik sogar noch weiter gehen. Sie will den streng reglementierten Yuan schrittweise in eine frei konvertierbare Weltwährung aufbauen. >>> ssu/AFP/Reuters | Mittwoch, 02. M¨rz 2011

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New Move to Make Yuan a Global Currency
A Chinese clerk counts yuan next to U.S. dollars. Photograph: The Wall Street Journal
THE WALL STREET JOURNAL: China has launched trading in its currency in the U.S. for the first time, an explicit endorsement by Beijing of the fast-growing market in the yuan and a significant step in the country's plan to foster global trading in its currency.

The state-controlled Bank of China Ltd. is allowing customers to trade the yuan, also known as the renminbi, in the U.S., expanding the nascent offshore market for the currency which began last year in Hong Kong.

The decision is the latest move by China to allow the yuan, whose value is still tightly controlled by the government, to become an international currency that can be used for trade and investment.

"We're preparing for the day when renminbi becomes fully convertible," Li Xiaojing, general manager of Bank of China's New York branch, told The Wall Street Journal. He said the bank's goal is to become "the renminbi clearing center in America." >>> Lingling Wei | Wednesday, January 12, 2011

Russia & China Take on the Dollar

Billige Dollar: Schäuble – Die Fed bricht internationale Abmachung
WELT ONLINE: Die US-Notenbank will die Wirtschaft mit der Notenpresse ankurbeln. Finanzminister Schäuble übt daran nun ungewöhnlich scharfe Kritik.

Finanzminister Schäuble kündigt an, die "amerikanischen Freunde" auf dem G-20-Gipfel kritisch ansprechen zu wollen. Foto: Welt Online
Bundesfinanzminister Wolfgang Schäuble (CDU) hat die jüngste Maßnahme der US-Notenbank zur Ankurbelung der Wirtschaft als Bruch internationaler Abmachungen kritisiert. Die großen Wirtschaftsprobleme der USA seien mit noch mehr Schulden nicht zu lösen, sagte Schäuble am Donnerstagabend den ARD-„Tagesthemen“. „Das war übrigens gemeinsame Politik, der sich noch alle Industrieländer, auch die USA, beim G-20-Gipfel in Toronto (...) ausdrücklich verpflichtet haben.“

US-Notenbankchef Ben Bernanke verteidigte dagegen den geldpolitischen Kurs der Federal Reserve. Die US-Notenbank hatte verkündet, Staatsanleihen für 600 Milliarden Dollar zu kaufen. Nach den Worten Schäubles bereiten die USA der internationalen Finanzwelt damit zusätzliche Probleme. Experten fürchten eine ausufernde Inflation sowie eine Verschärfung der weltweiten Währungsungleichgewichte.

„Wir werden das auch in bilateralen Gesprächen, aber natürlich auch beim G-20-Gipfel in der kommenden Woche in Südkorea mit unseren amerikanischen Freunden kritisch ansprechen“, kündigte der Minister an. Die USA wollen mit dem umstrittenen Manöver die Kreditzinsen senken, um auf diese Weise die schleppende Nachfrage anzukurbeln. Die neue Milliardenstütze der US-Notenbank lässt Europas Währungshüter kalt. EZB-Präsident Jean-Claude Trichet stellte am Donnerstag klar, dass die Europäische Zentralbank (EZB) an ihrem Kurs festhält und den Geldhahn allmählich zudrehen wird. >>> dpa/tma | Freitag, 05. November 2010

QE2 Risks Currency Wars and the End of Dollar Hegemony
THE DAILY TELEGRAPH: As the US Federal Reserve meets today to decide whether its next blast of quantitative easing should be $1 trillion or a more cautious $500bn, it does so knowing that China and the emerging world view the policy as an attempt to drive down the dollar.

QE2 risks currency wars and the end of dollar hegemony. Photo: The Daily Telegraph
The Fed's "QE2" risks accelerating the demise of the dollar-based currency system, perhaps leading to an unstable tripod with the euro and yuan, or a hybrid gold standard, or a multi-metal "bancor" along lines proposed by John Maynard Keynes in the 1940s.

China's commerce ministry fired an irate broadside against Washington on Monday. "The continued and drastic US dollar depreciation recently has led countries including Japan, South Korea, and Thailand to intervene in the currency market, intensifying a 'currency war'. In the mid-term, the US dollar will continue to weaken and gaming between major currencies will escalate," it said.

David Bloom, currency chief at HSBC, said the root problem is lack of underlying demand in the global economy, leaving Western economies trapped near stalling speed. "There are no policy levers left. Countries are having to tighten fiscal policy, and interest rates are already near zero. The last resort is a weaker currency, so everybody is trying to do it," he said.

Pious words from G20 summit of finance ministers last month calling for the world to "refrain" from pursuing trade advantage through devaluation seem most honoured in the breach.

Taiwan intervened on Monday to cap the rise of its currency, while Korea's central bank chief said his country is eyeing capital controls as part of its "toolkit" to stem the flood of Fed-created money leaking out of the US and sloshing into Asia. Brazil has just imposed a 2pc tax on inflows into both bonds and equities – understandably, since the real has risen by 35pc against the dollar this year and the country has a current account deficit.

"It is becoming harder to mop up the liquidity flowing into these countries," said Neil Mellor, of the Bank of New York Mellon. "We fully expect more central banks to impose capital controls over the next couple of months. That is the world we live in," he said. Globalisation is unravelling before our eyes. Read on and comment >>> Ambrose Evans-Pritchard, International Business Editor | Monday, November 01, 2010

Euro und Dollar zurzeit schwach
SCHWEIZER FERNSEHEN: In den letzten Tagen hat sich neben dem Euro auch der Dollar abgeschwächt. Die Ökonomen sind sich jedoch uneinig, wie sich die Währungen weiterentwickeln werden.

The Worst Publicity Stunt of the year? Putting President Obama on a Dollar Bill Is Simply Ridiculous
THE TELEGRAPH – BLOGS – NILE GARDINER: British graphic design firm Dowling Duncan has come up with a series of controversial ideas for the Dollar Redesign Project, an open competition run by New York designer Richard Smith (and not associated with the US government). According to their ambitious PR spiel: “we want to rebrand the US Dollar, rebuild financial confidence and revive our failing economy.”

The new garish multicolour notes conceived by the firm bear a striking stylistic resemblance to the Euro, and remove America’s Founding Fathers altogether. The company has proposed replacing George Washington with Barack Obama on the new dollar bill, and Benjamin Franklin with Franklin D. Roosevelt on the $100 dollar note.

Dowling Duncan, whose corporate clients include some big names such as Apple, Gap, Google, HP and Microsoft, obviously think this is a smart PR move, designed to win it global publicity and enhance its profile in the States where it has an office in San Francisco. But I very much doubt it will play well outside of diminishing left-wing circles on the East and West Coasts. If anything the publicity it gains with its Barack Obama stunt is highly likely to lose it business rather than bring in more revenue, especially in Middle America. Continue reading and comment >>> Nile Gardiner | Friday, August 27, 2010

Fed's Volte Face Sends the Dollar Tumbling
THE TELEGRAPH: Rarely before have a few coded words in the minutes of the US Federal Reserve caused such an upheaval in the global currency system, or such a sudden flight from the dollar.

The US workforce has shrunk by a 1m over the past two months as discouraged jobless give up the hunt. Photo: The Telegraph
The euro rocketed to a two-month high of $1.29 and sterling jumped two cents to almost $1.54 after the Fed confessed that the US economy may not recover for five or six years. Far from winding down emergency stimulus, the bank may need a fresh blast of bond purchases or quantitative easing.

Usually the dollar serves as a safe haven whenever the world takes fright, and there was plenty of sobering news from China and other quarters on Thursday. Not this time. The US itself has become the problem.

"The worm is turning," said David Bloom, currency chief at HSBC. "We're in a world of rotating sovereign crises. The market seems to become obsessed with one idea at a time, then violently swings towards another. People thought the euro would break-up. Now we're moving into a new phase because we're hearing alarm bells of a US double dip."

Mr Bloom said a deep change is under way in investor psychology as funds and central banks respond to the blizzard of shocking US data and again focus on the fragility of an economy where public debt is surging towards 100pc of GDP, not helped by the malaise enveloping the Obama White House. "The Europeans have aired their dirty debt in public and taken some measures to address it, whilst the US has not," he said.

The Fed minutes warned of "significant downside risks" and a possible slide into deflation, an admission that zero interest rates, $1.75 trillion of QE, and a fiscal deficit above 10pc of GDP have so far failed to lift the economy out of a structural slump.

"The Committee would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably," it said. The economy might not regain its "longer-run path" until 2016.

"The Fed is throwing in the towel," said Gabriel Stein, of Lombard Street Research. "They are preparing to start QE again. This was predictable because the M3 broad money supply has been contracting for months."

The Fed minutes amount to a policy thunderbolt, evidence of how quickly the recovery has lost steam. Just weeks ago the Fed was mapping out withdrawal of stimulus. Continue reading and comment >>> Ambrose Evans-Pritchard, International Business Editor | Thursday, July 15, 2010

Britain Distances Itself From Euro-Zone Crisis
THE WALL STREET JOURNAL: Britain’s new government has tried to distance itself from Europe’s debt crisis by embarking on painful economic austerity measures. The U.K. pound’s rise against the dollar and euro suggests its strategy is starting to pay off.

The pound has advanced 6% against the crisis-racked euro this year, picking up steam after Britain’s newly elected coalition government announced public-spending cuts and tax rises that have quieted down talk of a much-feared cut to Britain’s credit rating.

Prime Minister David Cameron and Treasury chief George Osborne are betting that Britain’s first order of business is fixing the public finances to avoid a Greece-style debt crisis. Their opposition, the Labour Party, insists that massive spending cuts this year could throw a wrench in Britain’s fragile economic recovery.

But so far investors are giving Britain’s economy the benefit of the doubt. Even as some analysts rub their eyes in disbelief, the U.K. pound continues to experience a big bounce: We’ve gone from one pound buying $1.42 in May to $1.5280. That’s getting closer to the roughly $1.60 level where the pound started the year.

Just about everything is going sterling’s way Wednesday. Good profit numbers from the U.S.’s Intel is fueling optimism and encouraging investors to take riskier positions like the U.K. pound. Fresh figures Wednesday on U.K. unemployment showed Britain’s rate falling to a 15-month low of 4.5% in June.

A day earlier, government reports showed that Britain’s inflation rate remains too high for the Bank of England, with prices rising 3.2% annually. That is raising expectations that the U.K. central bank could move faster than currently expected to raise interest rates. Higher rates make the pound more appealing. >>> Neil Shah | Wednesday, July 14, 2010