Dollar Falls Sharply in Asian Trading

[leftchick]

http://biz.yahoo.com/ap/060417/asia_dollar.html

TOKYO (AP) -- The dollar fell sharply against the euro and yen in Asia Monday on a media report suggesting that China might reduce its purchases of U.S. Treasury holdings, and amid speculation that U.S. interest rates may have peaked.

The U.S. dollar fell as low as 118 yen at one point before trading at 118.28 yen in Tokyo midafternoon, down 0.36 yen from late Friday in New York. The euro rose to $1.2178 from US$1.2108.

Cheng Siwei, vice chairman of the Standing Committee of the National People's Congress, was quoted in a Chinese state-owned newspaper Monday as saying that China should cut the amount of U.S. Treasury bonds it buys.

China has $875.1 billion in foreign currency reserves, much it in Treasuries. A reduction in that amount could undermine the dollar.

Sentiment toward the dollar also took a hit after an article in The Wall Street Journal said not all Fed officials are convinced that much more monetary tightening is required, traders said.

[RUMMYisFROSTED]

1. Aka a warning shot across the bow.

[ozymandius]

2. Word to the wise:

This is just a sampling of what will happen if China's interests in Iran are threatened.

[Lydia Leftcoast]

3. 118 yen isn't at all "low"

In fact, the last time I checked, it was in the 116-117 range, so the dollar has actually strengthened against the yen in the past two weeks.

A plunge below 115 would be significant. This is nothing, at least as far as the yen-dollar rate is concerned. The dollar has been as high as 250 yen/dollar and as low as 90 yen/dollar in the past 20 years.

(I deal with yen-dollar exchange rates all the time, since 90% of my customers are in Japan.)

[Javaman]

4. I wonder about china cashing in it's T-bonds...

Right now the U.S. imports a lot of crap from china.

If china was to sell of a portion of it's T-Bonds, that would drop the value of the U.S. dollar but at the same time, wouldn't that mean that stuff from china would cost us more? So therefore, companies would by less of it? So in a way, china is in a catch-22 position.

Is my reasoning correct in this?

[Canuckistanian]

5. What's the alternative?

Many suppliers buy exclusively from China. Walmart is so heavily invested in contracts and infrastructure in China, they couldn't extract themselves for years.

So, yes, prices would have to go up. They're already poised to go up becuase of rapidly rising energy costs.

In a few years I predict, Chinese-made goods won't seem to be much of a bargain anymore.

[NYC]

11. They aren't so much of a bargain now.

Do they cost less? Maybe. But there is the cost of unemployment, etc. that is not included in the price tag.

More importantly, the quality is not the same. Cashmere scarves from China pill. (My cashmere scarf from Scotland doesn't.) Shoes wear out faster. Gadgets break and/or wear out quickly. The shower curtain liners are just a little bit smaller. Two more inches, and the water wouldn't leak onto the floor, but for every 35 shower curtain liners they make, they get a "free" one.

We don't get what we pay for. They just keep telling us it's a bargain.

Thank you, Canada, for my sink and cabinets. I couldn't find American, so I bought Canadian -- because you pay your employees a living wage.

[enid602]

6. China

China's lukewarm support of the dollar might be an indication that they are starting to ween themselves off US imports. I visit Latin America frequently, and Chinese-made goods are everywhere down there these days.

[AngryAmish]

12. No

China has a fixed exchange rate. There would be a lot of pressure for them to adjust it, tho, so eventually Chinese stuff would be more expensive.

[DELUSIONAL]

7. Right -- now bushie is going to put his hands on his hips,

stomps his little footies and says "those commies" aren't going to tell me what to do.

And then lordy lordy -- please don't let this cornered rat carry out his insane plans to bomb Iran.

But if China and other nations can change his behavior -- they can do more than we the voters in the US can do.

Money is a very powerful weapon.

[DBoon]

9. If it is the USA vs the rest of the world

the rest of the world will win

[ckramer]

8. China has our balls in its hand

Bush has little choice to deal with them...

[kineneb]

10. it is starting...the slide

into recession(?) or something...the US consumer economy is a wholly-owned subsidiary of outside banking interests, mostly Chinese...no more cheap plastic crap