[Shadow_Group] Fw: dollar slumped

[shadowgroup-l at lists.resist.ca]

Reuters - Latest Business News

NEW YORK (Reuters) - The dollar slumped across the board, plunging to
four-and-a-half-year lows against the yen on Friday, after Federal
Reserve Chairman Alan Greenspan said demand for U.S. assets could decline
at some point given the size of the current account deficit. 

In remarks prepared for delivery to a European bankers conference in
Frankfurt, Greenspan said: "It seems persuasive that, given the size of
the U.S. current account deficit, a diminished appetite for adding to
dollar balances must occur at some point." 

The U.S. current account deficit, a broad measure of the nation's global
trade, is equivalent to roughly 6 percent of gross domestic product. To
bridge that gap, the United States must attract an estimated $3 billion
in capital daily, analysts say. 

Greenspan added that cutting the U.S. budget deficit, which has hit
record levels in dollar terms, would be the most effective U.S. policy
response to help rein in the record shortfall in the U.S. current
account. The U.S. budget deficit for fiscal year 2004 ending Sept. 30 was
$412 billion. 

"It seems remarkable that in prepared remarks he has come out with so
many remarks about the U.S. current account deficit and implying that
adjustment is needed. It is dollar bearish no question," said Greg
Anderson, senior foreign exchange strategist with ABN Amro bank in
Chicago. 

"It makes it clear that U.S. policy-makers do not want to stand in the
way of market adjustment that leads to a lower dollar. This really lays
it out," Anderson added. 

In morning New York trade, the euro traded up at $1.3044 (EUR=: Quote,
Profile, Research) . 

"The U.S. dollar is selling off of this. The attention is focused on the
U.S. twin deficits, right now. Again, there are fundamental and
structural reasons for the dollar to weaken, and despite what they (the
U.S government) say to talk it up, the market doesn't believe it," said
Firas Askari, head of FX trading at BMO Nesbitt Burns in Toronto. 

The dollar fell to around 102.79 yen (JPY=: Quote, Profile, Research)
according to Reuters data, the lowest level since April 2000. The U.S.
currency's losses against the yen accelerated after Greenspan said in a
question and answer session in Frankfurt that large currency
interventions do not create protracted changes in exchange rates,
although he conceded that they do have some effect. 

The dollar also dropped to new nearly nine year lows against the Swiss
franc to around 1.1584 francs (CHF=: Quote, Profile, Research) . Sterling
rose to $1.8578 (GBP=: Quote, Profile, Research) , while the Australian
dollar climbed around 1 percent to US$0.7855 (AUD=: Quote, Profile,
Research) . 

Jean Claude Trichet, the European Central Bank President, who was also in
the Frankfurt conference said, structural reforms are a necessary
condition for raising European growth. He added that the ECB's stability
mandate is the focus of its monetary policy.    Continued ...

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