NewsMine — economy — united-states — 2003 — 2003-nov-dec — Viewing Item

Dollar falls to fresh low against euro { November 18 2003 } Original Source Link: (May no longer be active)    http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1069131973719&p=1012571727088 http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1069131973719&p=1012571727088 Dollar falls to fresh low against euro By Jennifer Hughes in London and Jenny Wiggins in New York Published: November 18 2003 21:38 | Last Updated: November 18 2003 21:38 The dollar fell to a record low against the euro on Tuesday as data showing sharply weaker capital flows prompted new fears over the funding of the US current account deficit. Treasury figures showed net capital inflows into the US fell from about $50bn (E42bn) in August to $4.2bn in September, the lowest since the near-collapse and bail-out of the Long Term Capital Management hedge fund rattled markets in 1998. The euro rose two cents to $1.1953 against the dollar, beating its previous lifetime high of $1.1933, set in May. The data raised fears that the US may have difficulties funding its current account deficit, which ran at about $46bn a month in the first half of the year. "The September data is the strongest evidence to date that the record US current account deficit has become too large to finance through the net foreign investment into US securities, and is thus contributing to the long-term decline in the US dollar," said Michael Woolfolk, senior currency strategist at the Bank of New York. Fears of a trade war involving the US also put the dollar under pressure after the US Commerce Department said it was planning quota restrictions on Chinese clothing imports (see article this page). The news follows a dispute with Europe and Japan over steel tariffs that could escalate into a bigger trade war. "This raises overseas concerns over just how far the US will go in appeasing various domestic lobby groups - it makes investing in the US just a little bit more risky," said Tony Norfield head of currency strategy at ABN Amro. Economists said America's use of selective trade restrictions also implied exporters were struggling with the strong dollar and that a weaker currency was needed to sustain the US economic recovery. There were also fears that China might threaten to retaliate by selling some of its massive Treasury holdings - a move that would hurt the US bond market and which could weaken the dollar further. The report showed the fall in net inflows came from declines across numerous types of US financial assets. Foreign purchases of Treasuries have fallen to their lowest, on a monthly basis, since February, according to Lehman Brothers. The Treasury report said foreigners bought a net $5.6bn of Treasuries in September, down from $25.1bn in August. Foreigners engaged in net selling of "agency" debt sold by quasi-govermental agencies Freddie Mac and Fannie Mae for the first time since October 1998, getting rid of a net $3.2bn after buying $8.9bn the previous month. The lack of interest in bonds was not replaced by buying of equities. Private accounts and central banks sold some $6.3bn of equities. Japanese buying of US assets remains particularly strong, with some net $20bn of debt and equity purchases. Economists noted that the bulk of the selling came from private accounts and hedge funds, not central banks. Private Foreign accounts sold $2bn of Treasuries in September and $6bn of agency debt. Central banks, which hold large foreign reserves, continue to favour US bonds.

Companies overworking employees { November 12 2003 } Dollar 11 year low versus pound Dollar depreciation eats up opec gains Dollar falls to fresh low against euro { November 18 2003 } Economy booms ahead on investment surge End of steel tariff yield economic relief Extremely low inflation { December 5 2003 } Gold over 400 as euro strengthens { December 1 2003 } Gold price rises 20 percent over year { January 1 2004 } Jobless count skips millions { December 29 2003 } Market waiting for jobless claims employment { November 5 2003 } Nov consumer confidence at 14 month high Personal bankruptcy filings jump 8 percent Profit taking after 6 day gain drops dow Stocks at year highs after saddams capture Stocks rally as dow closes above 10 000 { May 24 2002 } Trade defecit china record high Unemployment indicators misleading few jobs added { January 9 2004 } Us jobless september claims higher { November 13 2003 } Us stocks dip after jobs data Files Listed: 20

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