Ouch - US dollar under 40 baht

[SiamIAm]

I also came across this today. Very interesting...

 

 

Central banks are shifting reserves away from the US and towards the eurozone in a move that looks set to deepen the Bush administration's difficulties in financing its ballooning current account deficit.

 

 

In actions likely to undermine the dollar's value on currency markets, 70 per cent of central bank reserve managers said they had increased their exposure to the euro over the past two years. The majority thought eurozone money and debt markets were as attractive a destination for investment as the US.

 

The findings emerge from a survey of central bank reserve managers published today and conducted between September and December of last year. About 65 central banks, controlling assets worth $1,700bn, took part and the results showed a marked change in attitude over the past two years.

 

Any rebalancing of central bank reserve portfolios has serious implications for the global financial system as the US has become increasingly dependent on official flows of funds to finance its current account deficit, estimated at $650bn in 2004.

 

At the end of 2003, central banks held 70 per cent of their official reserves in dollar- denominated assets and central bank purchases of US securities had financed more than 80 per cent of the the US current account deficit in 2003.

 

Any reluctance to increase exposure to dollar assets further could cause the greenback to plunge on currency markets.

 

"The US cannot take support for the dollar for granted," said Nick Carver, one of the authors of the study conducted by Central Banking Publications, a company that specialises in reporting on central banks.

 

"Central banks' enthusiasm for the dollar seem to be cooling off."

 

In a further worrying sign for the greenback, 47 per cent of reserve managers surveyed said they expected the growth of official reserves to slow to less than 20 per cent over the next four years. Between the end of 2000 and mid-2004, official reserves had increased by 66 per cent.

 

Slower reserve accumulation growth implies the supply of official finance is likely to become more limited but few expect the demand from the US for finance to slow. The consensus among economists is that the US current account deficit will increase to $694bn in 2005.

 

More than 90 per cent of central bank reserve managers said that the income from reserve management was "important" or "very important".

 

In the two years since a similar survey was conducted, reserve managers had begun to seek higher returns for the money under management.

 

For these managers, dollar assets have become less attractive because the fall in the dollar since 2002 has reduced the yield they received and, in some cases, has led to negative real returns.

 

Alan Greenspan, the chairman of the Federal Reserve, warned in November that there was a limit to the willingness of foreign governments to finance the US current account deficit.

 

The survey was conducted on the guarantee of anonymity for the banks involved. The 65 central banks that participated control 45 per cent of global official reserves. Individually, they had up to $250bn under management.

[rickfarang]

[Guest]

Now lets see:

 

One month after the IRAN war begins [color:"white"] XXXXXX [/color] [color:"red"] US dollar will be equal to 32 baht [/color]

 

 

One month after the NORTH KOREA war begins [color:"red"] US dollar will be equal to 25 baht. [/color]

 

 

 

People do not realize, getting rid of the devil does have its price!

 

[color:"white"] XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX [/color]

[krml]

The big thing is China. When they finally stop pegging the yuan against the dollar and let it move on its own then the dollar will drop considerably. Most Asian currencies are expected to rise when this happens.

 

I know I am not looking forward to that day. This depreciation has already cost me a lot of money.

 

Who knows what will happen with Iran and N. Korea. They are both a threat. It might happen eventually. The proliferation of weapons and terrorism from both of their governments should be seen as a threat to everyone.

 

Ask Japan and S. Korea about N. Korea's Kim Jong Il. He is a complete nut job. Also Iran's state sponsored terrorism...

[rickfarang]

"People do not realize, getting rid of the devil does have its price!"

 

But apparently, electing the Devil carries an even higher price.

[krml]

Yeah Thaksin will be trouble won't he?

[Guest]

Went to pick up some money I'd just wired to Thailand,

Euro lost 5% to the bath in one month How can it be?

[short-time]

Hey, just be glad you are not trading US dollars!

 

ST

[Dali]

The falling dollar is certainly making those LOS trips less of a bargain, but the value for the money is still much better than here in the U.S.

 

I'm personally glad to see the falling dollar as it helps U.S. manufacturing be more competitive. Reports are that some U.S. manufacturers who have been in a long down turn are reporting improved business and have actually started hiring again.

 

As for my personal portfolio and retirement savings, I'm playing all cards by being broadly diversified with domestic and global funds across all sizes and sectors.

[short-time]

As for the value you get for the US$ in LOS being a better value than here in the USA that?s debatable and very dependent on what you are buying.

 

I?m glad you are pleased with the falling value of the dollar - but I?m not. :: These reports you mention of ?some? U.S. manufactures being more competitive sounds like GOP propaganda to me. Don?t know where you are getting your facts (possibly Fox News or CNN) but businesses are in fact NOT hiring as G.W. promised would be the result of a weakened dollar which would make us more competitive. Most companies are sucking off any benifit as extra profit.

 

Fact is, the trade deficit is at an all time high and in 2004 increased to $666 billion or 25.5% from the previous year. According to the Bushies - the weakening dollar was supposed to reduce the trade deficit. Guess someone got their facts wrong or we are being lied to.

 

Perhaps when the wages of the average US worker is two or three dollars a day plus a sack rice a month, we will again be competitive in the world market and there will be lots of jobs available here in the US and no trade deficit.

 

Hope I never live to see these happy days.

 

ST