Will The Dollar Rebound In 2008

[ray23]

I would have said absolutely not I was thinking sometime in the next five years. But there are some very wealthy people that seem to believe it will do just that. They are putting thier money on it doing so. I hope they are right.

"Bernanke Makes Bulls From Dollar Bears Seeing Growth (Update3)

By Bo Nielsen

Feb. 4 (Bloomberg) -- Ben S. Bernanke's decision to lower interest rates 1.25 percentage points last month will end the dollar's two-year slide, according to the world's biggest currency traders.

For the first time since 2003, investors are focused on relative growth prospects rather than absolute borrowing costs, according to Geoffrey Yu, a London-based strategist with UBS AG, the No. 2 trader. The steepest cuts by a Federal Reserve chairman in seven years will support economic growth in the U.S. as Europe slows, said BNP Paribas SA, the most accurate currency forecaster Bloomberg tracks. The dollar will gain at least 9 percent against the euro this year, UBS and BNP predict.

``We're not chasing dollar weakness any lower,'' said Robert Robis, a fixed-income manager in New York at OppenheimerFunds Inc., which oversees $260 billion. ``The Fed's actions have avoided a long recession and we may start to see a recovery later this year.''

Robis has reduced the share of euro-denominated assets versus those linked to the dollar in his $9 billion portfolio. It now holds less than the benchmark index because he expects the U.S. currency to outperform. As recently as November, he was ``overweight'' the euro against the dollar.

Futures traders cut the value of contracts benefiting from a drop in the dollar to $13.9 billion as of Jan. 29, according to Charlotte, North Carolina-based Bank of America Corp., the second-largest U.S. bank by assets. That's down from a record $32.3 billion in November.

Yield Advantage

The dollar has gained 1 percent versus the euro to $1.4824 since sinking to an all-time low of $1.4967 on Nov. 23. The currency appreciated even as the yield advantage on a two-year German bund more than doubled to 1.28 percentage points over a comparable Treasury note, making bunds more appealing to international investors. The last time the spread was so large was 2002, when the euro surged 18 percent against the dollar.

Paris-based BNP, the most accurate of 31 firms surveyed about their currency predictions for the second half of 2007, is among the most bullish on the dollar in 2008 with its forecast of $1.36 per euro by yearend. Zurich-based UBS predicts $1.35. The median estimate calls for a 5.4 percent increase to $1.40 by the end of this year and a 6 percent gain to $1.32 in 2009. The dollar weakened 10.6 percent in 2007 and 11.4 percent in 2006 after strengthening 12.6 percent in 2005.

Fed Versus ECB

While two Fed cuts slashed the target rate for overnight loans between banks to 3 percent in nine days, the European Central Bank kept its benchmark rate unchanged at a seven-year high of 4 percent in an attempt to curb inflation. The ECB will keep rates unchanged at its Feb. 7 meeting, according to all 55 economists surveyed by Bloomberg News.

``If aggressive cuts by the Fed can stimulate the economy, then the U.S. will definitely lead the way in terms of economic recovery,'' Yu said. ``The ECB is behind the curve, so it's time to move back'' into the dollar, he said.

Deutsche Bank AG, the world's largest currency trader, predicts an 8 percent gain in the dollar this year as the euro- zone economy expands 1.6 percent, lagging behind the 1.9 percent growth projected for the U.S. For 2009, Frankfurt-based Deutsche Bank puts growth at 2.6 percent in the U.S. and 1.9 percent in Europe.

Maxime Tessier, head of foreign exchange at Caisse de Depot et Placement in Montreal, isn't counting on Bernanke. It may be too late for lower borrowing costs to keep the U.S. out of a recession, he said. The Labor Department said Feb. 1 that payrolls fell by 17,000 in January, the first decline since August 2003.

2001 Reprisal

``From our vantage point it doesn't look very good and every week we re-evaluate the U.S. economy, it has deteriorated,'' said Tessier, whose firm manages $143 billion. ``It's too early to position your portfolio for a dollar rebound because a month from now the currency could be in rally mode, but it could also be a lot lower.''

The U.S. is entering the ``worst consumer recession since 1980,'' and the dollar will fall to $1.57 by the end of March before recovering to its current $1.48 by yearend, according to David Rosenberg, chief economist for North America in New York at Merrill Lynch & Co. The firm is the world's largest brokerage.

The dollar has benefited from Fed rate cuts before. During the first six months of 2001, the currency gained 10 percent against the euro as the central bank slashed its target 2.75 percentage points to below the ECB's benchmark refinance rate following the bursting of the technology bubble.

Foreign Holdings

``We still believe the U.S. promises good returns,'' Sultan bin Sulayem, the chairman of state-owned investment group Dubai World, said Jan. 25 at the World Economic Forum in Davos, Switzerland. Dubai World agreed in August to invest as much as $5.1 billion in Kirk Kerkorian's Las Vegas-based casino group MGM Mirage.

Middle Eastern and Asian investors have poured up to $39 billion into U.S. banks since August, according to Bloomberg calculations. Foreign holdings of U.S. securities rose a net $149.9 billion in November, the most in 22 months, the Treasury Department said last month in Washington. In October, the gain was $92.2 billion.

Investors say there are encouraging signs that business investment will hold up. Last week the House and Senate Finance Committees approved a fiscal stimulus package of as much as $157 billion proposed by President George W. Bush. The same day the Labor Department said the economy was shedding jobs, the Institute for Supply Management said its manufacturing index rose in January.

``A lot of the people are finding this is a good time to get back in the dollar,'' said Scott Ainsbury, a money manager who helps oversee $12 billion in currencies at FX Concepts Inc., a New York-based hedge fund.

To contact the reporters on this story: Bo Nielsen in New York at [email protected]

Last Updated: February 4, 2008 07:49 EST "

Edited February 4, 2008 by ray23

[wasabi]

I can't give you a fancy rationale with supporting data but intuitively I think it will go up this year. I just don't see what more that is likely to happen that isn't already factored in. Also the contrarian in me thinks with so much bearishness it has to go up. In a similar vein I have started being REIT ETFs and have been doing well.

[Rinrada]

Low dollar is GOOD for US Exports...figure

[jumnien]

I predict the ability of the US to weaken its dollar will fade as the rest of the world is no longer willing to accept the impact. Bush has hurt the world more by his dollar policies than by his miserable foreign policies.

[Maestro]

I am not convinced that it was a deliberate policy of the US government to drive the dollar as low as it is now against the euro. I see other factors at play:

– rapidly growing national debt

– balance of payments deficit

– reduced proportion of dollar holdings by central banks in many countries

– reductions in the prime rate in the USA

– fear of worsening recession in the USA

And there are probably some other factors, too.

If the low dollar helps to increase US exports and reduce US imports and the recession passes, the dollar will go up again.

--

Maestro

[VegasVic]

I am not convinced that it was a deliberate policy of the US government to drive the dollar as low as it is now against the euro. I see other factors at play:

– rapidly growing national debt

– balance of payments deficit

– reduced proportion of dollar holdings by central banks in many countries

– reductions in the prime rate in the USA

– fear of worsening recession in the USA

And there are probably some other factors, too.

If the low dollar helps to increase US exports and reduce US imports and the recession passes, the dollar will go up again.

--

Maestro

Maestro, A very good summation! There are only a few things that I would add, while the Bush administration did not have a deliberate weak dollar policy and in fact Sec. Paulson and his predesessor Sec. Snow did often talk a strong dollar policy, the reality is that it was always done with a wink and a nod. With the hundreds of billions of dollars spent on the war on terrorisim the Bush administration welcomed a weakening currency to increase U.S. exports while muting to a degree (a seemingly small degree at times) any increase U.S. imports. The green light was given to people like George Soros early on to "feel free to short the greenback" and Soros did indeed establish a large and increasing short position starting way back in late 2003 on the dollar. Mr. Soros's fund was early to the party and there were many hedge funds that followed Soros's lead, but a little over a month ago George Soros took off that short and while it may take many months until the other funds unwind their short position, this will occur, and when the E.U. central banks do eventually cut rates then we will begin to see the true turnaround of the dollar. The U.S. dollar is a big boat to tunaround and it will be a gradual process, in all honesty I don't think that any substantial and longterm strengthening will actually begin until much later this year when a new administration is elected. No matter who is elected President next November I would look for a "real" strong dollar policy coupled with a much tougher trade policy with China and a drawdown of troops in Iraq. These things coupled with a lower corporate income tax (to bring jobs back that were outsourced to China,India, Packistan,Latin america ect.), and the eventual deflation of the China bubble will lead not only to repatriated investments back to the U.S. but also to increased foriegn investment in the U.S. markets, all of which will help to strenghten the dollar. I know that Thailand has been adversely effected by the weak dollar, and the BOT has had their hands full trying to reign in the strengthening baht, so hopefully for Thailand and many other small countries adversely effected by the weak dollar, the dollar does make a substantial but gradual turnaround.

[mogoso]

I am not convinced that it was a deliberate policy of the US government to drive the dollar as low as it is now against the euro. I see other factors at play:

– rapidly growing national debt

– balance of payments deficit

– reduced proportion of dollar holdings by central banks in many countries

– reductions in the prime rate in the USA

– fear of worsening recession in the USA

And there are probably some other factors, too.

If the low dollar helps to increase US exports and reduce US imports and the recession passes, the dollar will go up again.

--

Maestro

Its hard to bet on its rise, the unnecessary amounts that congress seems to need to spend has no limits, the illegal transfer of funds outside of the by illegals within the country, the social welfare cost of those same illegals is staggering from education health housing wic welfare etc. A probable tax rise if Demos or McCain are elected, continuing military expenditures, idiotic energy policies, a gov't run by opinion polls. Theres only one congreesman I'd even keep in congress. Its sucks to have our gov't, and not for the war, but for all the other claptrap.

[ProThaiExpat]

Excellent posts so far! Would appreciate above posters comments on a theory that I have hatched up regarding a weak dollar policy coupled with, as one poster said, a "wink and a nod".

Assume that non-U.S. governments would very much like to help the U.S. in the war on terror but cannot due it publicly for political reasons. What better way to help than to allow a weak dollar to exists without retaliatory policies. When the G7-8 meet, I have wondered if they don't do a lot of "winking and nodding" and agree "under the table" to help the U.S. financially by allowing a U.S. cheap export policy to exist without taking aggressive policies against that phenomenon, in other words "take it on the chin" currency wise, thus helping the U.S. financially.

Am I loony on this?

[fletchsmile]

The article mainly dicsusses USD v EUR. On that score I think USD will generally trend higher over the year higher, with a few ups and downs.

EUR in particular, and to a lesser extent GBP seem to have taken up the brunt of the dollar's weakening. A key factor in this is some of the other key currencies like CNY, haven't allowed their currencies to appreciate. Hence the outlet valves have been EUR and GBP, which in my view have strengthed a little too much to compensate for dollar weakness.

EUR and GBP look overvalued to me.

If you throw other currencies into the picture, particularly some of the Asian ones, eg CNY, SGD, KRW, I can't see USD rebounding vs those.

Edited February 5, 2008 by fletchsmile

[palm]

Excellent posts so far! Would appreciate above posters comments on a theory that I have hatched up regarding a weak dollar policy coupled with, as one poster said, a "wink and a nod".

Assume that non-U.S. governments would very much like to help the U.S. in the war on terror but cannot due it publicly for political reasons. What better way to help than to allow a weak dollar to exists without retaliatory policies. When the G7-8 meet, I have wondered if they don't do a lot of "winking and nodding" and agree "under the table" to help the U.S. financially by allowing a U.S. cheap export policy to exist without taking aggressive policies against that phenomenon, in other words "take it on the chin" currency wise, thus helping the U.S. financially.

Am I loony on this?

[Naam]

The article mainly dicsusses USD v EUR. On that score I think USD will generally trend higher over the year higher, with a few ups and downs.

EUR and GBP look overvalued to me.

that's what the "anal"ysts and "experts" of major banks are telling me since nearly two years. unfortunately (for them) until now they were wrong

[lannarebirth]

Pretty naive to think US didn't/doesn't have a deliberate weak dollar poicy. 7 trillion lost paper wealth from dotcom bubble, interest rates cut to 1% creating hard asset bubble, cargo planeloads of $100 bills flown into Iraq and Afghanistan. Government sending out "free" money to anyone with a pulse to shop at the malls. The question is, will it pay off? I have my doubts.

If past is prolouge to future, then a run up to the 40 month ema here might happen:

http://stockcharts.com/h-sc/ui?s=$usd...&listNum=10

edit: Hmmm, don't think it shows the monthly chart. Anyway, bottoming activity in '88 -'94 time frame required 3 runs to 40 month ema before breaking higher.

Edited February 5, 2008 by lannarebirth

[fletchsmile]

The article mainly dicsusses USD v EUR. On that score I think USD will generally trend higher over the year higher, with a few ups and downs.

EUR and GBP look overvalued to me.

that's what the "anal"ysts and "experts" of major banks are telling me since nearly two years. unfortunately (for them) until now they were wrong

Guess I have to disagree with your analysts for the past 2 years at least

I haven't been interested in USD since around 2001/2. To be honest I'm still not that interested in USD, or EUR for that matter. Not directly anyway.

But, this is the first year since 2001/2, if someone asked me which one will fair better in 2008 among the EUR,GBP,USD; I'd choose USD. Prior to that, it would have been bottom of the list of 3 each year if someone asked the same question.

That said I won't be heavily buying into the dollar.

Edited February 5, 2008 by fletchsmile

[cclub75]

Pretty naive to think US didn't/doesn't have a deliberate weak dollar poicy. 7 trillion lost paper wealth from dotcom bubble, interest rates cut to 1% creating hard asset bubble, cargo planeloads of $100 bills flown into Iraq and Afghanistan. Government sending out "free" money to anyone with a pulse to shop at the malls. The question is, will it pay off? I have my doubts.

Especially also, when Bush has just presented a budget with a historic high deficit !

The views of the guys from BNP are totally idiotic.

Basically, the core of their forecast is that the US economy, thanks to interest cuts, will strongly rebound, when other countries will still endure a slowdown, therefore it will somehow reactivate a positive biais toward the USD.

``If aggressive cuts by the Fed can stimulate the economy, then the U.S. will definitely lead the way in terms of economic recovery,'' Yu said. ``The ECB is behind the curve, so it's time to move back'' into the dollar, he said.

The point is : no one is asking if very low interest rates will indeed manage to boost the growth.

Basically, they are thinking a totally new current situation within an old frame : the famous "greenspan put".

Put gasoline onto the fire, and you'll get a hel_l of a fireworks. Great.

But, it's unlikely that it will work that way. The US consummers is exhausted, and we just have too much of debt.

Even free loans won't change this situation.

The bubbles must deflate. The USD must go down.

[lannarebirth]

Pretty naive to think US didn't/doesn't have a deliberate weak dollar poicy. 7 trillion lost paper wealth from dotcom bubble, interest rates cut to 1% creating hard asset bubble, cargo planeloads of $100 bills flown into Iraq and Afghanistan. Government sending out "free" money to anyone with a pulse to shop at the malls. The question is, will it pay off? I have my doubts.

Especially also, when Bush has just presented a budget with a historic high deficit !

The views of the guys from BNP are totally idiotic.

Basically, the core of their forecast is that the US economy, thanks to interest cuts, will strongly rebound, when other countries will still endure a slowdown, therefore it will somehow reactivate a positive biais toward the USD.

``If aggressive cuts by the Fed can stimulate the economy, then the U.S. will definitely lead the way in terms of economic recovery,'' Yu said. ``The ECB is behind the curve, so it's time to move back'' into the dollar, he said.

The point is : no one is asking if very low interest rates will indeed manage to boost the growth.

Basically, they are thinking a totally new current situation within an old frame : the famous "greenspan put".

Put gasoline onto the fire, and you'll get a hel_l of a fireworks. Great.

But, it's unlikely that it will work that way. The US consummers is exhausted, and we just have too much of debt.

Even free loans won't change this situation.

The bubbles must deflate. The USD must go down.

Bubbles don't have to fully deflate, and usually they don't. Usually the frothy end gets cut off and there is trading within a range for a longperiod of time. Remember, up and down are not the only trends. Sideways is a trend also.

As for the $USD, as a trader I look at it this way: Once what I expect to happen happens, I take my profit and move on to more high percentage trades. Many people begin to change their view instead, masking them idealogues, which is hazardous to investment gains. Yeah, it could go down more, but the meaty part of the move seems to be behind us. IMO.

[ray23]

Thanks guys great thoughts. But that crafty Thai baht seems to just keep going up. That one I don't get at all. There was a time that I thought I understood, but now what appears to have been hidden debts are beginning to surface. There really wasn't much of a honeymoon period for the new governement. Not a lot confidence being expressed in it's finishing it's term. But the baht still appreciates, go figure. Or maybe it is just to soon to see the effects darned if I know.

[stevehaigh]

it seems clear from today that the fed rate cuts are not going to stop the US and maybe the world going into a major recession. hence the rosy dollar predictions based on a turn around in the US economy see unlikely.

i have cash in my retirement accounts (in dollars, bummer!) i can buy gold with it it turns out. i can't take possession of the gold because its in a tax differed account and fidelity charges a .125% storage fee every 3 months.

anyhow, any ideas about gold vs. the dollar over the next 6-12 months?

[stevehaigh]

fyi: i found this interesting from http://www.kitco.com/ind/Hamlin/jan112008.html

1. Economic conditions in the U.S. will deteriorate further and we will finally get consensus that the dreaded “R” word is a reality. The fed will intervene and do everything possible to avert it, but it has been delayed for so long that the any fed plans to prop up the economy will ultimately fail.

2. The sub-prime crisis will intensify with additional write-downs and massive quarterly losses for the financial giants. Bailouts will never seem to be enough and any relief will be short-term with announcements of additional cash infusions being necessary. At least one major bank or financial institution will go under and cease to exist by the end of Q2.

3. Real estate prices will continue to fall in 2008. A new round of rate resets will usher in a second and larger wave of foreclosures. The worst of the financial and real estates crisis is definitely ahead of us, not behind us.

4. The fed will continue to lower rates (below 3%) and flood the market with dollars in an attempt to prop up the economy, but it will be too little too late. There will be rallies, but the muted and fading effect of fed intervention will create a panic in the markets that will cause a massive selloff, albeit prolonged.

5. The dollar will suffer tremendous losses as the printing presses kick into high gear and foreign central banks and commercial institutions rush to the door even faster than they did in 2007. China will continue to diversify their reserves out of dollars, creating additional downside pressure and pushing the Euro closer towards becoming the world’s new reserve currency. The unwinding of the yen carry trade will be another factor pushing the dollar to new lows in 2008. There will be several mini-rallies along the way that will convince people that the dollar is going to rebound, but it will end the year losing another 10-15% in value.

6. Oil will dip towards $80 per barrel due to the slowing economy and release of additional supplies. However, continued inflation and war in the Middle East will push oil back above $100 and could see the price spike towards $150 in the event of war with Iran.

7. Gold will post its highest gain yet during 2008, outpacing the 31% gain of 2007. Investors will start to take more interest in gold as it becomes hard to ignore the massive advances from lower rates, the lower dollar and higher oill Gold equities will catch up to the metal and return to offering impressive leverage. Junior miners will outpace the majors and silver will outpace gold by a small margin. Prices will become much more volatile with $50 days in either direction and a trading range between $770 - $1,120 during 2008. Gold will suffer a major correction at some point, but it will be shorter than previous corrections and any dips will prove to be excellent buying opportunities.

8. Political unrest will increase with major events taking place in Iran, Pakistan and beyond. The U.S. will enter another country and start another war, despite being spread thin already. Tensions will increase with Russia and China, who see U.S. moves as a power grab and threat to their interests in the region.

9. I won’t offer a prediction as to who wins the U.S. presidential election, but I will forecast high voter turnout, plenty of controversy and a focus on voter fraud from the use of electronic voting machines. Recounts, lawsuits, protests and a very divided America, especially as the economic slowdown hits consumers in the pocketbook.

10. Alternative energy stocks will continue to do well in 2008, led by the solar sector. Global warming will continue to be a hot topic (pun intended). Government subsidies will increase, especially if the Dems win the white house. New technologies will continue to make alternative energy more efficient and viable.

2008 will be a difficult year for many investors, but I don’t intend to be one of them. There are opportunities in the markets at all times. I will continue to be long gold and silver, picking up quality juniors along the way. I am also long on clean energy stocks, including solar, wind and uranium. Peace and prosperity to all in 2008!

[thaihome]

fyi: i found this interesting from http://www.kitco.com/ind/Hamlin/jan112008.html

1. Economic conditions in the U.S. will deteriorate further and we will finally get consensus that the dreaded “R” word is a reality. The fed will intervene and do everything possible to avert it, but it has been delayed for so long that the any fed plans to prop up the economy will ultimately fail.

2. The sub-prime crisis will intensify with additional write-downs and massive quarterly losses for the financial giants. Bailouts will never seem to be enough and any relief will be short-term with announcements of additional cash infusions being necessary. At least one major bank or financial institution will go under and cease to exist by the end of Q2.

3. Real estate prices will continue to fall in 2008. A new round of rate resets will usher in a second and larger wave of foreclosures. The worst of the financial and real estates crisis is definitely ahead of us, not behind us.

4. The fed will continue to lower rates (below 3%) and flood the market with dollars in an attempt to prop up the economy, but it will be too little too late. There will be rallies, but the muted and fading effect of fed intervention will create a panic in the markets that will cause a massive selloff, albeit prolonged.

....blah, blah, blah...!

An amazing anti-American rant disguised as a supposedly intelligent analyses.

One question:

In your #3 you say a rate reset will cause another wave of foreclosures, while in your #4 you say the Fed will continue to cut rates. Since the variable rate mortgages you claim will be foreclosed due to [increased] rate reset are tied to the prime (or some derivative or it) and should therfore go down, aren't you stating mutually exclusive scenarios?

TH

Edited February 6, 2008 by thaihome

[cclub75]

An amazing anti-American rant disguised as a supposedly intelligent analyses.

Hum... you have a rather strange understanding of the word "anti american"...

I mean to say that the FED will continue to cut, that the real estate market will continue to suffer, the sub prime crisis will continue etc... is to be an anti american ? You must be higly sensitive.

It's just plain common sense. Absolutly not politics.

And furthermore, the author of the article says that he will not risk to predict the winner of the presidential elections.

There is only controversial item on this list : US might go to war with another country.

[thaihome]

Ok, maybe the anti-American rant accusation was bit harsh. Now that I took the time to look this individual up, it explains a lot. Gold bugs just love the end of the world.

“Jason Hamlin is the founder of Gold Stock Bull, a site providing investment strategies for profiting on the bull markets in Gold, Silver and Alternative Energy.”

Sounds like a some one with a real objective point of view.

Common sense, yeah right….

TH

[lazeeboy]

im going to the states this year for a holiday ,last time i went there was 1.56 dollars to the pound ,now its almost 2 ,so happy days for me..

[Wrong Turn]

I am not convinced that it was a deliberate policy of the US government to drive the dollar as low as it is now against the euro. I see other factors at play:

– rapidly growing national debt

– balance of payments deficit

– reduced proportion of dollar holdings by central banks in many countries

– reductions in the prime rate in the USA

– fear of worsening recession in the USA

And there are probably some other factors, too.

If the low dollar helps to increase US exports and reduce US imports and the recession passes, the dollar will go up again.

--

Maestro

Some think the US will try to export its way out of a recession (or the recession that has just started).

IMO, the U.S. recession has already started, as the latest data was released yesterday.

I hope the dollar does go up.

[Naam]

Some think the US will try to export its way out of a recession (or the recession that has just started).

that thinking will go away the next day when they are sober

as far as "dollar going up" is concerned it has already gone up vs. its major competitor the €UR. considering Bernanke's two rate cuts the USD shows extreme relative strength vs. all major currencies.

[Abrak]

Personally I am confused....

Logic dictates...

The largest US$ dollar borrower in the world is the US Government.

The second largest borrower is the US consumer.

So they are the biggest beneficiaries of a fall in the dollar.

And of course the US Government controls the supply of dollars so that it can always inflate its way out of its problem...

Worst of all noone can afford to pay their interest on their debt so we will have to cut interest rates....

So the dollar should go down right?

[Naam]

Personally I am confused....

Logic dictates...

The largest US$ dollar borrower in the world is the US Government.

The second largest borrower is the US consumer. So they are the biggest beneficiaries of a fall in the dollar.

And of course the US Government controls the supply of dollars so that it can always inflate its way out of its problem...

Worst of all noone can afford to pay their interest on their debt so we will have to cut interest rates....

So the dollar should go down right?

that is a misconception Abrak. for the U.S. consumer the value of the dollar matters when he buys imported things. low dollar = imports expensive. for the U.S. debtor however the value of the dollar vs. other currencies is as irrelevant as the proverbial bag of rice which topples over in a warehouse located in Northern Manchuria. if he owes 50,000 dollars it does not concern him/her whether one dollar buys 33 Baht or 10 Baht, 1 €UR or 0.1 €UR... etc.

[swain]

"Euros Accepted even preferred" signs pop up in New York City

NEW YORK (Reuters) - In the latest example that the U.S. dollar just ain't what it used to be, some shops in New York City have begun accepting euros and other foreign currency as payment for merchandise.

"We had decided that money is money and we'll take it and just do the exchange whenever we can with our bank," Robert Chu, owner of East Village Wines, told Reuters television.

The increasingly weak U.S. dollar, once considered the king among currencies, has brought waves of European tourists to New York with money to burn and looking to take advantage of hugely favorable exchange rates.

"We didn't realize we would take so much in and there were that many people traveling or having euros to bring in. But some days, you'd be surprised at how many euros you get," Chu said.

"Now we have to get familiar with other currencies and the (British) pound and the Canadian dollars we take," he said.

While shops in many U.S. towns on the Canadian border have long accepted Canadian currency and some stores on the Texas-Mexico border take pesos, the acceptance of foreign money in Manhattan was unheard of until recently.

Not far from Chu's downtown wine emporium, Billy Leroy of Billy's Antiques & Props said the vast numbers of Europeans shopping in the neighborhood got him thinking, "My God, I should take euros in at the store."

Leroy doesn't even bother to exchange them.

"I'm happy if I take in 200 euros, because what I do is keep them," he said. "So when I go back to Paris, I don't have to go through the nightmare of going to an exchange place."

Edited February 7, 2008 by swain

[NovaBlue05]

"Euros Accepted even preferred" signs pop up in New York City

NEW YORK (Reuters) - In the latest example that the U.S. dollar just ain't what it used to be, some shops in New York City have begun accepting euros and other foreign currency as payment for merchandise.

"We had decided that money is money and we'll take it and just do the exchange whenever we can with our bank," Robert Chu, owner of East Village Wines, told Reuters television.

The increasingly weak U.S. dollar, once considered the king among currencies, has brought waves of European tourists to New York with money to burn and looking to take advantage of hugely favorable exchange rates.

"We didn't realize we would take so much in and there were that many people traveling or having euros to bring in. But some days, you'd be surprised at how many euros you get," Chu said.

"Now we have to get familiar with other currencies and the (British) pound and the Canadian dollars we take," he said.

While shops in many U.S. towns on the Canadian border have long accepted Canadian currency and some stores on the Texas-Mexico border take pesos, the acceptance of foreign money in Manhattan was unheard of until recently.

Not far from Chu's downtown wine emporium, Billy Leroy of Billy's Antiques & Props said the vast numbers of Europeans shopping in the neighborhood got him thinking, "My God, I should take euros in at the store."

Leroy doesn't even bother to exchange them.

"I'm happy if I take in 200 euros, because what I do is keep them," he said. "So when I go back to Paris, I don't have to go through the nightmare of going to an exchange place."

A simple protest statement. If they had any balls, they would advertise that they accept no USD .

[bingobongo]

yes, it will

[Maestro]

...the Bush administration welcomed a weakening currency to increase U.S. exports while muting to a degree (a seemingly small degree at times) any increase U.S. imports...

But did it work? US annual trade balance:

2000 -379,835
2001 -365,126
2002 -423,725
2003 -496,915
2004 -612,092
2005 -714,371
2006 -758,522

2007
Month		 Balance
Annual
January	  -57,010
February	 -57,882
March		-62,688
April		-58,867
May		  -59,928
June		 -59,634
July		 -59,072
August	   -56,963
September	-57,118
October	  -57,768
November	 -63,118
December

Source: U.S. Census Bureau, Foreign Trade Division.

Based on last year's average for January to November, the annual total would come out at about 709,000, a substantial reduction from 2006, yet the dollar weakened agaist the euro by about 10%. Other factors obviously outweighed the improvement in the trade balance.

The latest interest rate cuts are too recent to see their effect on the trade balance. We’ll just have to wait and see.

--

Maestro