Saturday October 10, 2009

Asian central banks intervene to prop up US dollar after USDX fall below 76

reuters.com :

Asian central banks bought US dollars to weaken their own currencies, traders said, as the slumping USD threatens smaller export-driven economies. Asian central banks said to be intervening in currency markets overnight by buying dollars included South Korea, Hong Kong, Taiwan, Thailand, the Philippines and possibly Indonesia.

Emerging market Asian nations, already struggling with weak US demand for their exports, have been doubly hurt because their currencies appreciated against the dollar, prompting intervention. There was also an indication that Russia bought as much as $4 billion this week. Despite the apparent buying, USDX, the US dollar index fell 0.9% to 75.798, a 14-month low. Analysts say the moves are also protection against a double dip global recession. The risk of course, is that the US dollar loses value, making purchases now a bad bet.

- USDX 76 is actually proving to be a reasonably strong support level. But below 72 there is nothing but empty air. We'll just have to see what happens next in the next few weeks.

See also :

1. US Dollar Index (USDX) crashes below 80 after Fed rate cut to zero percent, ZIRP era begins
2. US dollar index falls below 84 as Fed ramps up printing press
3. NYMEX crude oil prices soar above $72 on economic recovery, euro rally
4. COMEX gold prices hit new record high of $1061.40 per ounce in third straight session

(2009-10-10 20:55:05 SGT) [Biz] Permalink

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