Dollar Slammed Again
May 21st, 2009 | By Doug Casey | Category: US Dollar & Forex TradingIn the currency market, the dollar plummeted against the euro. Late Wednesday, the euro was trading at $1.3829 vs. $1.3633 on Tuesday.
The buck is now at its lowest vs. the euro since January. The dollar index, which plots the geenback against a basket of currencies, also took a big hit, sinking to 80.002. That’s a 7-month low .
The Fed helped pound the dollar, as the release yesterday of minutes of its April 28-29 meeting contained a statement that purchases of long-term assets “might well be warranted at some point to spur a more rapid pace of recovery.”
That’s a problem, because increased Fed purchases of dollar-denominated debt could lower the value of the currency since the Fed pays for those purchases by printing more funny money.
“Even the allusion to the possibility that the Fed was even thinking of expanding those programs and putting more dollars into the system is going to weigh on investor perception of where the dollar will be priced,” said Matt Esteve, a currency trader at Tempus Consulting.
Meanwhile, Treasury Secretary Geithner was punching the happy button before the Senate Banking Committee yesterday, opining that the U.S. financial system is beginning to heal. “Leverage has declined, the most vulnerable parts of the non-bank financial system no longer pose the same risk, and banks are funding themselves more conservatively,” Tiny Tim said.
Geithner added that the administration has $124 billion more on hand, to provide to banks if needed.
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Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.
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