WEST PALM BEACH, FL (www.hedgeco.net) – The U.S.dollar has lost grounds in recent trading against major world currencies such as the Yen and Euro. The dollar trouble may have been started by rumorsabout hedge fund troubles. But analysts believe that the drop may have resulted from press reports saying that the quick and rapid expansion of hedge fund industry has created a situation whereby itis difficult for managers to make profitable trades.
Such concerns added to another unfounded speculation about hedge fund troubles have helped to push the dollar down. Investor�s in Europe and North America are worried about hedge fund troubles in GM investment. Action Economics said, �The associated decline in some large European bank shares may have limited follow-through buying in EUR-USD.�
Troubles for the Yen resulted from statements from the Chinese government bureau warned about the consequences of the loosening of the Chinese currency peg to the dollar. A statement attributed to China’s National Bureau of Statistics stated, �That a 15% appreciation of the Yuan would turn China’s export growth negative this year.�
Toru Umemoto, chief currency strategist at Barclays Bank in Tokyo said, “I don’t think the Chinese government will revalue the Yuan this week or so. It is a highly political decision. At this moment China is unlikely to get anything in exchange for a revaluation, politically.” Toru added, “China dislikes the idea of changing its policy in response to overseas pressure.�
The United States has continued to pressure China to remove its artificial peg to the dollar. A US spokesman mentioned after talks with a Chinese government official that China is in a better position now to introduce exchange rate flexibility. The U.S. and the Chinese financial officials will meet again for further talks.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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