NewsMine — economy — united-states — 2004 — 2004-dec — Viewing Item

Foreigners slow purchases of US assets Original Source Link: (May no longer be active)    http://www.bloomberg.com/apps/news?pid=10000087&sid=aWGkIpTtFRPM&refer=top_world_news http://www.bloomberg.com/apps/news?pid=10000087&sid=aWGkIpTtFRPM&refer=top_world_news Dollar Extends Drop; Foreigners Slow Purchases of U.S. Assets Dec. 15 (Bloomberg) -- The dollar extended its declines versus the euro and the yen after a government report showed foreigners increased their purchases of U.S. securities in October at the slowest pace in a year. International investors bought $48.1 billion of Treasury notes, corporate bonds, stocks and other financial assets, down from a revised $67.5 billion in September, the Treasury Department said in Washington. ``A number of about $50 billion would be significantly negative for the dollar,'' Carsten Fritsch, a currency strategist in Frankfurt at Commerzbank AG, said before the report. Versus the euro, the dollar declined to $1.3405 at 9:14 a.m. in New York from $1.3298 late yesterday, according to electronic foreign-exchange trading system EBS. The dollar also fell to 104.22 yen from 105.54 late yesterday. This year, the U.S. currency is down 5.8 percent against the euro and 2.6 percent compared to the yen. The dollar has declined since Fed Chairman Alan Greenspan told the European Banking Congress in Frankfurt on Nov. 19 that foreign investors may tire of financing a record shortfall in the U.S. current account, the broadest gauge of trade. The trade deficit widened more than expected in October to a record $55.5 billion, the Commerce Department said yesterday. ``We have the deepest and most liquid capital markets in the world and we're going to keep them that way,'' U.S. Treasury Secretary John Snow said in an interview with Bloomberg News. ``We will be able to attract the capital we need.'' Current Account The current-account shortfall probably grew to $170.6 billion last quarter, based on the median forecast of economists surveyed by Bloomberg. To compensate for the gap and maintain the value of the dollar, the U.S. needs to attract about $1.8 billion a day, or about $55 billion a month, based on Bloomberg calculations. The current account is a measure of trade, services, tourism and investments. ``Recent behavior of the dollar is a timely reminder of the risk posed by the unbalanced pattern of global growth and savings and its reflection in the current-account deficits and surpluses,'' International Monetary Fund Chief Economist Raghuram Rajan said in a speech in Sydney today. The yen's advance against the dollar began in Asian trading after a Bank of Japan report showed Japanese companies increased forecasts for earnings and spending. The central bank's quarterly Tankan index also showed that optimists among manufacturing executives outnumbered pessimists for a sixth quarter, dispelling some speculation that the pace of growth in the world's second-largest economy will slow further. ``Details of this report were better than people had expected,'' said Adam Cole, a currency strategist in London at RBC Capital Markets. ``There had been rumors that the report would be very poor, so it's a sigh of relief.'' Last Updated: December 15, 2004 09:15 EST

Dollar no longer reserve currency Economy adds fewer jobs than expected End of 2004 year market surges { December 26 2004 } Foreigners slow purchases of US assets Free land to encourage settlement in the heartland { December 23 2004 } Homeless vets showing up at shelters Hungry homeless figures increase { December 14 2004 } Mid december fed boosts interest one quarter New home sales plunge in west { December 24 2004 } Strong pound to breach 2 dollars { December 8 2004 } Trade deficit swells to record 55 billion Unemployment claims rise 8000 in latest week US economic crisis pending Workers income fell { December 4 2004 } Files Listed: 14

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