re: question re $us - morgan stanley
From today's South China Morning Post. No matter what eople say, the direction of the USD had to change because it was just digging a deeper hole. As I see it, it is in the interest of the US for the USD to weaken to try and rescue jobs.
The US dollar fell in early trade overnight on speculation that America's current-account deficit will hurt efforts to revive the US economy and attract foreign investment. The shortfall in the current account, which includes trade and income on investments, means the US needs almost US$1.4 billion a day in foreign capital to sustain the dollar's value. Japan and the 12-nation euro region have account surpluses.
"This massive need for foreign investment is not a good recipe for growth," Stephen Roach, the chief economist at Morgan Stanley, said. "Over the next year or so the dollar is going to make a pretty determined descent."
The dollar fell to 123.10 yen at 10.40am in New York, from 123.64 on Wednesday. It weakened to US$1.0156 per euro from US$1.0087.
The current account gap narrowed to US$127 billion in the third quarter from a record US$127.6 billion in the previous quarter, the Commerce Department said.
"We're in the process of a long-term decline in the dollar because of the current-account deficit," said Michael Woolfolk, a currency strategist at Bank of New York, forecasting a decline to US$1.0210 per euro and 122 against the yen by the end of the year.
The dollar, which had fallen to 122.63 yen in early trading, trimmed losses after a government report showed US retail sales rose last month for the first time in three months.
Sales rose 0.4 per cent after a revised 0.1 per cent rise in October. Sales excluding cars rose 0.5 per cent, compared with a 0.8 per cent gain in October, the Commerce Department said.
A separate report from the Labour Department said the number of workers filing new claims for state jobless benefits rose last week to the highest in eight months, a sign layoffs at companies may be picking up, analysts said.
