Monday June 9, 2008 - 20:27:44 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-FX remarks from Treasury, Fed boost dollar
(Recasts with Paulson, Geithner remarks; updates prices; adds
* Dollar rallies as Paulson won't rule out intervention
* Fed's Geithner says central bank watches dollar closely
* Surprise gain in U.S. pending home sales lends support
By Steven C. Johnson
NEW YORK, June 9 (Reuters) - The dollar jumped on Monday as
top Treasury and Federal Reserve officials voiced concern about
its recent slide, raising the chances that officials could step
into the foreign exchange market to support the U.S. currency.
The dollar rose by more than 1 percent against the euro and
yen after Treasury Secretary Henry Paulson declined to rule out
intervention and New York Fed President Timothy Geithner said
the central bank pays close attention to the dollar.
"It seems the Fed and Treasury feel the need to help
underpin the dollar," said Omer Esiner, senior market analyst
at Ruesch International in Washington.
"There's a growing consensus among policy makers that to
let some steam out of the commodity bubble, they need to see
the dollar appreciate, and this is a step in that direction."
By late afternoon, the dollar was up 1.3 percent at 106.28
yen <JPY=>, while the euro fell 1 percent to $1.5626 <EUR=>,
off a session high of $1.5845. The euro rose 0.3 percent to
166.08 yen <EURJPY=> after earlier hitting 167.15, its highest
Dallas Fed President Richard Fisher also chimed in on
Monday, saying a weak dollar can create a "negative feedback
loop" that spurs inflation and saps growth.
The remarks come shortly after Fed Chairman Ben Bernanke
last week linked the weak dollar to rising import prices and
consumer price inflation, prompting a brief wave of dollar
Those gains were wiped out a day later when European
Central Bank President Jean-Claude Trichet said euro zone
interest rates could rise in July to counter inflation, pushing
the euro to within two cents of an all-time high above $1.60.
On Monday, Trichet reiterated that message at a conference
in Paris, and analysts said ECB rate hikes could complicate
efforts to intervene to stabilize the dollar.
"I think they are trying to jawbone the dollar higher right
now, but if that fails, there is the risk of intervention if
the euro goes back to the $1.60 neighborhood," Esiner said.
Indeed, Paulson also said on Monday that the long-term U.S.
economic fundamentals would eventually "shine through" in the
But he also told CNBC television "I would never take
intervention off the table or any policy tool off the table. I
just can't speculate about what we will or won't do."
Analysts warned that intervention would carry risks. "There
is nothing like unsuccessful intervention to turn an orderly
foreign exchange market into one that smacks of crisis," said
RBS Greenwich Capital international strategist Alan Ruskin.
LEHMAN, HOUSING DATA LEND SUPPORT
The dollar also got a boost from Lehman Brothers Holdings
Inc's (LEH.N: Quote, Profile, Research) plans to raise $6 billion in fresh capital on the
view that it could help stabilize the U.S. financial sector.
The Wall Street bank announced its plan after posting a
$2.77 billion second-quarter loss. For details click
A 6.3 percent rise in U.S. pending home sales in April also
added to dollar optimism, while a small drop in oil prices
CLc1 from Friday's record high of $139.12 per barrel also
helped remove some of the concerns around the U.S. economy.
Higher energy prices stoke concerns of rising inflation
across the board, reducing consumer spending power and stemming
economic growth. [O/R].
(Additional reporting by Nick Olivari; Editing by James
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."