Dollar tumbles to new lows
– March 14 (Bloomberg) — The dollar sank to the weakest ever against the euro and to a 12-year low versus the yen after JPMorgan Chase & Co. and the New York Federal Reserve agreed to provide emergency funding to Bear Stearns Cos., signaling credit market losses may widen.
The U.S. currency also plunged to below parity with the Swiss franc for the first time as traders speculated the Fed will slash interest rates a full percentage point next week to keep a credit-market crisis from triggering a recession.
“The initial reaction is to sell the U.S.: sell the dollar, sell the equities,'’ said Jeff Gladstein, global head of foreign-exchange trading at AIG Financial Products in Wilton, Connecticut. “This is bad news; it’s definitely a confirmation of the reality that U.S. financial institutions are having a hard time.'’Â –
http://www.bloomberg.com/apps/news?pid=20601080&sid=aLjXeMH1Q_aE&refer=asia
Comment: What will come next is that the monetary authorities will come up with some ill-conceived scheme of a concerted action to halt the dollar’s slide. Yet what they cannot do is change the fundamentals. It was the monetary authorities in the first place who produced the mess. You can’t put together again the egg once it is broken. Better get a new one.
posted by Antony Mueller