The Yankee $

Discussion in 'Current Affairs, News and Analysis' started by jonwilly, May 16, 2006.

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  1. http://www.telegraph.co.uk/money/main.jhtml;jsessionid=IHIR11B5FWXC1QFIQMGSFFWAVCBQWIV0?xml=/mon

    "The sudden repatriation of funds back to America triggered a rebound in the dollar yesterday, halting the sharp slide that has transfixed financial markets over the past week.

    "Risk aversion is taking over the show," said David Bloom, a currency expert at HSBC.

    "Americans are pulling their money off the table and bringing it back home to mama. We saw the same repatriation after the 1987 crash, causing the dollar to rally for two or three days."

    Mr Bloom said fears of a dollar collapse had been the chief source of contagion spreading worldwide, compounded by an inflation scare hitting bonds. After rallying 1.03pc against the euro to $1.2807, the slide is likely to resume soon.

    "I expect the dollar to fall fast and furious against everything because the point of inflexion has been reached in US interest rates," he said. "If the Fed is not going to keep rewarding me with higher rates for the risk of holding dollar assets, why should I hold them?

    "The US is importing $750bn more than it is exporting every year and now has $2,500bn in external liabilities. This is a big call on world savings and it can't go on forever," he added. HSBC is advising buying Swiss francs, yen, and Scandinavian currencies until the storm has passed."

    john