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Medvedev May Push Proposal For ‘New World Currency’ | Republic Broadcasting Network http://republicbroadcasting.org/?p=2219 The dollar dropped to its lowest level against the euro this year on speculation record U.S. borrowing will undermine the greenback, prompting nations to consider alternatives to the world’s main reserve currency. The 16-nation euro gained for a fourth day versus the dollar as the Russian government said emerging-market leaders may discuss the idea of a supranational currency. The pound strengthened to $1.65 for the first time since October. “There’s been a lot of talk out of Russia about a new global currency, and that’s contributing toward this latest bout of dollar weakness,” said Henrik Gullberg, a currency strategist at Deutsche Bank AG in London. “These latest comments are just adding to the general dollar weakness we’ve seen recently.” The dollar slid 0.9 percent to $1.4289 per euro at 10:52 a.m. in New York, from $1.4159 yesterday. It touched $1.43, the weakest level since Dec. 29. The dollar fell 0.5 percent to 96.08 yen, from 96.59. The euro rose 0.4 percent to 137.36 yen from 136.78. The pound traded at $1.6557, compared with $1.6443, after touching $1.6564, the highest level since Oct. 30. The U.S. currency pared its decline versus the yen as the National Association of Realtors said pending sales of existing homes climbed 6.7 percent in April. The median forecast of 32 economists surveyed by Bloomberg News was a 0.5 percent gain. The Dollar Index, which ICE uses to track the currency’s performance against the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, fell 0.5 percent to 78.77. Russian Proposal Russian President Dmitry Medvedev may discuss his proposal to create a new world currency when he meets counterparts from Brazil, India and China this month, Natalya Timakova, a spokeswoman for the president, told reporters by phone today. Medvedev first proposed seeking alternatives to the U.S. dollar as a reserve currency in March. The dollar also declined on speculation “smaller” central banks started today’s selling of the greenback, said Sebastien Galy, a currency strategist at BNP Paribas SA in New York. “If people believe that there is official pressure behind it, then obviously it puts pressure on euro-dollar on the upside,” Galy said. Galy predicted the 16-nation currency may reach $1.4360 today, a peak last reached in December. There will be demand for the record amount of debt the U.S. is selling, Treasury Secretary Timothy Geithner said in an interview earlier today with state media outlets in China. China’s ‘Understanding’ China has a “very sophisticated understanding” of why the U.S. is running up budget deficits, Geithner said in Beijing, pledging to rein in borrowing later. “Despite the more comforting words we’ve had from the Chinese to the U.S. overnight, it does seem that the world’s reserve managers are still concerned about exposure to the dollar,” said Ian Stannard, a foreign-exchange strategist in London at BNP Paribas SA. The Dollar Index fell 9.3 percent since April 20, when it reached a one-month high. Libor for 12-month loans in dollars dropped 0.34 percentage point to 1.61 percent in the period. The euro earlier fell versus the yen as Europe’s jobless rate jumped in April to the highest level in almost 10 years. Unemployment in the 16-member euro region increased to 9.2 percent from 8.9 percent in March, the European Union statistics office in Luxembourg said today. ECB President Jean-Claude Trichet said last month it would buy 60 billion euros of covered bonds. The Federal Reserve, Bank of England and Bank of Japan are already purchasing government and corporate bonds in a policy known as quantitative easing, which is intended to keep borrowing costs low. The ECB will keep its benchmark rate unchanged at 1 percent on June 4, according to a Bloomberg survey. ‘Last Stage’ The euro’s rally against the dollar may be entering its “last stage,” and investors would likely benefit from selling the 16-nation currency against the greenback, UBS AG said. Europe’s currency is poised to weaken toward $1.30, analysts led by Mansoor Mohi-uddin, Zurich-based chief currency strategist at the world’s second-biggest foreign-exchange trader, wrote in a note to clients yesterday. The analysts reiterated forecasts for the euro to trade at $1.40 in one month’s time and weaken to $1.30 in three months. “We remain positive on the U.S. dollar and think that the greenback is likely in its final stage of weakness,” the analysts wrote. “Equity and bond flows have the potential to surprise and could lend support to the dollar --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "APFN" group. To post to this group, send email to APFN@googlegroups.com For more options, visit this group at
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