Risks of dollar Rout Increase

I personally think a move into the mid 1.30s probable but
I think it will terminate under 1.50, then there were be
a speculative crash but not far. The future will tell us.

This is deja vue stuff, I remember the dollar at 3.9 francs
to the dollar.

Earl


******


Dollar Slide Accelerates; Risks of Rout Increase


NEW YORK -- The relentless dollar selling showed no sign of letting up in
New York Tuesday, with the dollar sinking to new lows across the board.

In morning trading, the euro was at $1.2794, up from $1.2664 late Monday in
New York. The dollar was at 106.17 yen, up a little from 106.07 yen late
Monday, only thanks to aggressive dollar bids from Japanese banks on behalf
of Japanese monetary authorities, dealers said.

Against the Swiss franc, the dollar was at 1.2256, down from 1.2337, while
sterling was trading up at $1.8260 from $1.8060.

If anything, the dollar's slide was accelerating along with the increase in
trading volume as investors return to the market after the holiday period.
With very little to convince them otherwise, certainly not official rhetoric
from U.S. or euro-zone policymakers, they're simply putting on fresh short
dollar positions, en masse.

The euro was printing fresh all-time highs and zoning in fast on $1.30, the
market's next big psychological target. Meanwhile, sterling was up around
two whole cents on the day at new 11-year highs.

The dollar's malaise is widespread, with only official buying -- mainly from
Japanese monetary authorities -- and a sprinkling of corporate demand
appearing to stand in the way of the current run on the dollar turning into
a rout.

Certainly, Japan's position differs from the official line coming out of the
U.S. and euro zone, which is one of relative and potentially damaging
nonchalance. For example, Federal Reserve ( news -web sites ) Governor Ben
Bernanke said Sunday that the risk of a dollar crisis is "quite low," and on
a historical measure against a basket of currencies, the dollar isn't
actually all that weak.

In this context, it's difficult to see what will, in the very near term,
prompt a shift in market opinion and spark a dollar rally. Positive U.S.
economic data clearly aren't doing it.

Even the release of a disappointing purchasing managers' index for the euro-
zone service industry didn't dent the euro's advance Tuesday. The numbers
showed the main index falling to 56.6 last month instead of rising to 58.5
from 57.5 in November as expected.

The stark difference in official rhetoric between Japanese officials on the
one hand and U.S. and euro-zone policymakers on the other was highlighted
Tuesday by Japanese Finance Minister Sadakazu Tanigaki. He warned that the
MOF will "take proper action when the market moves rapidly."

His comments are in stark contrast to Mr. Bernanke's, and appear to be
backed up by firm action. Dealers estimate the MOF bought around $5 billion
or more Monday to prevent the dollar from falling below 106 yen, and have
bought at least another $2.5 billion Tuesday.

Japanese exporters are also becoming more vocal about the yen's strength,
which makes their products more expensive abroad.

Toyota Motor President Fujio Cho said Tuesday that the yen currently appears
" a bit too strong" against the dollar.

Neil Jones, director of foreign-exchange sales in London at Nomura
International, said it surely can't be long before euro-zone exporters start
to protest the euro's strength, too.

"There are parallels appearing with the euro zone and Japan," Mr. Jones
said, adding that the bloc's exporters will likely increase pressure on the
European Central Bank to at least verbally intervene to halt the euro's
appreciation. " I'd be amazed if there wasn't any verbal intervention [with
the euro] at $1.35," Jones said.

As ridiculous as that scenario may have looked even a few weeks ago, it
doesn't seem quite so outlandish now.

*

-Jamie McGeever of Dow Jones Newswires contributed to this article.

"Earl Evleth" wrote in message
...
I personally think a move into the mid 1.30s probable but
I think it will terminate under 1.50, then there were be
a speculative crash but not far. The future will tell us.

This is deja vue stuff, I remember the dollar at 3.9 francs
to the dollar.

I once got about 3.86, yet another time nearly 10. There were very few
American tourists in France that year when it was 3.86. I even carried a
few UKP travelers' checks just in case no one would accept dollar ones.

On 6/01/04 22:39, in article , "R J
Carpenter" wrote:


"Earl Evleth" wrote in message
...
I personally think a move into the mid 1.30s probable but
I think it will terminate under 1.50, then there were be
a speculative crash but not far. The future will tell us.

This is deja vue stuff, I remember the dollar at 3.9 francs
to the dollar.

I once got about 3.86, yet another time nearly 10. There were very few
American tourists in France that year when it was 3.86. I even carried a
few UKP travelers' checks just in case no one would accept dollar ones.


One of our real estate purchase in Paris was when it was around 4.1, not a
good rate.

When the France got above 8 in the 1980s, I advised a lot of my friends who
had the money to buy in Paris. The prices has been pretty static for years
and I expected a rise, plus the franc was low. One could not lose and 4
of them bought. Unfortunately they never lived here so they ended up
asking me to handle the apartments for a long time. I gave that up but
one friend still asks me to change her light bulbs! She has a fancy
modern apartment in the 8th with embedded halogen lamps in the ceilings,
a bitch to change. I also check the mail now and then, she is only her
in the summers or for a week or so. She does not rent the place.
Our other friends finally got professional help to manage their places
so I am off the hook
`
Anyway my purchase advice was right. I got the reputation of knowing
the real estate market and a communist French friend even sought out
my advice about 5 years ago. I said "buy" the market would go no
lower, I was right again! Right now I would not buy. However, Paris
it still cheaper than New York or London.

The prices peaked in the early 1990s and fell back a bit and only recently
has began to rise. The euro rising also means that, in dollar terms, one has
gained 20-30% on the exchange rates in the last year. Prices themselves
have stagnated again. However. I suspect that the Americans are out of the
Paris real estate market because of the euro. I don`t what foreigners are
in the market here.

But it is all paper profits unless one sells. One of our American friends
sold our here and bought in Tuscany last year.

Earl