The dollar's decline accelerates, causing alarm in the currency markets

This mutant is a crisis as the worst viruses. The problems of a small segment of the U.S. credit, subprime, resulted in the worst financial storm in recent decades, and in turn the financial crisis moved to end leather whipping the real economy, which is hardly out of the worst recession since the war. A dangerous new mutation is in sight: the dollar accelerates its plunge yesterday and touched 14 months lows against the euro. Threatens to cause turmoil in the already volatile currency markets to lose ground to other major currencies in the past half year. The snowball is growing: several Asian central banks yesterday announced interventions to build dams to contain and stop this fall, in a moment of weakness in the U.S. economy.No self-respecting financial crisis has not led to a severe foreign exchange crisis. This possibility is remote, but the devaluation of the dollar adds uncertainty to the painful world economy that has barely even bend the corner to recovery. Much is at stake: the collapse of the dollar makes the output of the U.S. crisis, which lowers their exports. And retruque complicates the rest of the economies, especially the most exporting.
The difficulty for export is the main reason behind the wave of interventions by central banks of South Korea, Malaysia, Thailand, Philippines and Hong Kong, which yesterday bought dollars-or dollar-denominated assets to prevent further devaluation of the U.S. currency, very dangerous in countries making the foreign sector the engine of their economies. These movements, small-scale, are still recurrent in the currency markets in recent weeks, but go further: even Japan, the world's third largest economy and a leading member of the now almost defunct G-7, threatening a massive intervention to stop an escalation of the yen, in eight months highs against the dollar.
"The central bank interventions are not unusual in China and Brazil are doing every day, as oil exporters to compensate for movements of the market that suits them. The worry is if it begins to take larger it's hard to go against the market, "explained Paul Guijarro, International Financial Analyst (AFI).
Jose Luis Martinez, Citi added that such interventions "are cushioning the fall of the greenback. "But the pressure on the dollar is strong. It comes from the very weak U.S. economy, the U.S. monetary policy stimulus and a more speculative forces: investors are using cheaper to borrow dollars for something that previously required with other currencies, "he said.

In a day full of major economic policy decisions-the UK and the euro zone left interest rates unchanged at 0.5% and 1% respectively, the disarray caused by the dollar accounted prominence: gold hit a new high, and well above $ 1,000 an ounce, and crude oil climbed to $ 70 a barrel. Talk is cheap: the leaders of G-20 countries plus emerging rich-agreed last month in Pittsburgh working together to solve global imbalances, but virtually no mention of exchange rates, which appear as a major source of conflict.
U.S., the UK and to a lesser extent the euro area have enabled the machine to print money-purchase of public and private debt, which in practice is a hidden devaluation, the greater the more you give the machine. The emerging, which have fared better in the crisis, continue to accumulate reserves and serve markets for their currencies, in an uncoordinated way. And amid the swell, all is seemingly well: the U.S. has not abandoned the mantra of "strong dollar" but also complains about his downfall. Also the European Central Bank president, Jean-Claude Trichet, yesterday repeated the usual prescription: "We are campaigning to extend the use of the euro at the international level. Both the U.S. and Europe believe that a strong dollar is in the interest of the United UU. Yet today's dollar is anything but strong.