| Greenspan not worried from weakened dollar Original Source Link: (May no longer be active) http://www.mercurynews.com/mld/mercurynews/business/7707538.htmhttp://www.mercurynews.com/mld/mercurynews/business/7707538.htm
Posted on Wed, Jan. 14, 2004 Greenspan sees no dollar fallout Bloomberg News
Federal Reserve Chairman Alan Greenspan said the United States is able to fund its near-record current account deficit with few consequences for the global financial system and that the dollar's decline hasn't sparked inflation.
``There is, for the moment, little evidence of stress in funding U.S. current account deficits,'' Greenspan said in a Berlin speech. ``To date, the widening to record levels of the U.S. ratio of current account deficit to GDP has been, with the exception of the dollar's exchange rate, seemingly uneventful.''
The U.S. economy and markets haven't been hurt by a 25 percent decline in the dollar against major currencies since early 2002, Greenspan said. That's not so in Europe, where European Central Bank President Jean-Claude Trichet said Monday the ECB is concerned about ``brutal'' currency swings and member Ernst Welteke said Tuesday the euro's appreciation could ``put a brake'' on a recovery in Germany.
Euro-area exporters ``have been under considerable pressure,'' Greenspan said in his speech at a Bundesbank event in Berlin. Still, European economies also have benefited as stock prices rise and borrowing costs fall worldwide, he said.
The chairman said he's ``quite optimistic'' there won't be a dollar crisis because individual economies are more flexible than in the past, and ``inflation, the typical symptom of a weak currency, appears quiescent.'' Greenspan made the comment while responding to almost 30 minutes of questions from the audience at the Deutsches Historiches Museum.
Greenspan's comments about the deficit were ``too Pollyannaish'' because ``clearly people think it's putting strain'' on the global economy, said David Malpass, chief global economist at Bear Stearns & Co., in a television interview with Bloomberg News.
|
|