Save our dollar

Now I have to kill you...

See you Monday.

I know who you are!! All that illuminated talk about swap curves gave you away. Make sure that your people get their noses out of facebook and make sure that you attend the function on Monday evening. Capice?

Victory attained by violence is tantamount to a defeat, for it is momentary. Mahatma Gandhi

Grantley, I think we are both on the same wave length other than if the dollar peg will go one day but I take your point about the interest rates, this of course does stop any de-pegging of the dollar. Short term there will be no change in the Status Quo, long term only time will tell.

What we all must remember, at present, a long term weak dollar is not in the interest of the World enconomy due to the dependence of the market place on the dollar and the faith in it.

Richard, totally agree and they are doing it, the EU is building relations with alot of diverse countries in the world. They are also concentrating on Russia as an export partner and of course as there Power supplier.

and yes those German cars are good.............have one and love it.......long live Mercedes Benz

a USD fall could 'wipe out' the debt, but I take your point. But if it falls 10%, then USD1tr is out of the pockets of the investors.

Anyway, the peg here will also stick around as there are no interest rates locally. No such thing as a QR Libor (DIBOR?), or any sort of swap curve. Without an underlying interest rate curve, the currency can't be priced. QCB is aware of this, but won't/can't comment publicly. They seem to be resisting efforts to develop a local capital market, despite lobbying by some of the largest banks in the world.

Aaaah - Qatar!!

The Europeans can alleviate the situation by buying goods that are produced in the EU and by selling their goods to other nations than the US. The Canadians can afford European goods as can developing countries in Asia. Europe should concentrate on Russia. Now that is a rich country. Forget India and China, the Russians have all the money and all the natural resources to provide a very good market for Europe. And those Russians love German cars (who doesn't). Ohh those Russians!

Victory attained by violence is tantamount to a defeat, for it is momentary. Mahatma Gandhi

I thought European economy would be hit by a very weak dollar, i.e. European goods too expensive to export and things like that … is there anything they can do in Europe to alleviate the situation?

There is no way the Chinese, Japanese or anyone else sitting on trillions of US$ instruments are going to allow the US$ to go into free- fall and thus wipe out their reserves.

And by the way, Jonathan Anderson, Chief Economist at UBS in Asia, has commented that the real Chinese economy s smaller than Italy's. It's a low tech affair built on cheap-labour and exports of cheap goods. The rest is driven by direct foreign investment. China then tries to copy the technology and their economy gets a trickle down through the salaries paid by foreign firms. Take all that overseas driven manufacturing out and whats left?

Virtually no large firms there are making money - Carlsberg sold their brewery, VW has not made a cent.

BTW, I am in Hong Kong.

If you're living life on the edge, you've got too much room.

There is no way the Chinese, Japanese or anyone else sitting on trillions of US$ instruments are going to allow the US$ to go into free- fall and thus wipe out their reserves.

And by the way, Jonathan Anderson, Chief Economist at UBS in Asia, has commented that the real Chinese economy s smaller than Italy's. It's a low tech affair built on cheap-labour and exports of cheap goods. The rest is driven by direct foreign investment. China then tries to copy the technology and their economy gets a trickle down through the salaries paid by foreign firms. Take all that overseas driven manufacturing out and whats left?

Virtually no large firms there are making money - Carlsberg sold their brewery, VW has not made a cent.

BTW, I am in Hong Kong.

If you're living life on the edge, you've got too much room.

Hong KOng $.....because it is fixed.

If you're living life on the edge, you've got too much room.

Whatever makes you happy.........

Haa Richard America is on the verge of a collapse.... No body can change the tide... Its India China all the way now u can stop it.....

Where is Greenspan? Where is Buffett? Call in the Guards 911 Cmon'

Yalla

Don't forget tourism either, now that the dollar is weak it makes Holidays to the US very affordable. That also bolsters the US economy. Even when things look bleak for some sectors other sectors will flourish.

Grantley, the dollar would have to fall along way to make a dent and a difference in the $10 trillion (as of 2006) debt the US presently has.

There are at present many deals within the world enconomy that are no longer done in dollars, especially in the private sector. As for the price of oil, well its posted in Dollars but that doesnt mean its a real dollar. The changes in the dollar against major world currencies is main push behind oil prices, you look around to see how the dollars doing and change your price accordingly. At the present time the oil price is related to the EURO and its strength against the dollar.

Everybody in the finance & Oil business knows, Dollar down = barrell price up, its always been that way.

And lastly there are other reasons other than purely financial ones that will affect the Dollar Peg, there are alot of countries out there that would prefer not to have there currency linked to the dollar for political reasons. As long as the dollar is strong, the political arguement doesnt come into play but a weak dollar for a long period of time will make the political card stronger.

It going to take only one big player to want to get rid of the dollar peg, and beleive me the others will agree.

Forget the dollar save yourself, Anyways the Honorable Minister for Finane and Economy has repeatedly said that they will not depeg the riyal from the Dollar.

And on the other hand the Honorable energy Minister wants the oil price to cross the 100 dollar psychological limit. The 100 dollar price might be great for the OPEC but have they thought what will happen to the other countries? Even in Qatar the prices of the commodities will sky rocket and once the oil crosses the 100$ barrier then there will be no stopping to it.

I wonder who are the advisors

it also reduces greatly the amount of foreign debt the US has. The debt holders get back their USD, but it buys them much less at home. A useful exercise in debt management for the US Treasury. Also a useful way to lower consumer spending by raising the cost of imports. As to removing "the peg", not gonna happen. It will take a brave visionary to demand payment in Eur or whatever, and the associated volatility in that currency would be strenuously managed by the appropriate authorities. The 'consensus management' style in the GCC would see such a proposal take years to get through.

Maintaining the USD as the 'base' currency for the peg is in some regards to please the US, but largely a function of how/what countries like Qatar get paid in for their exports, to Ngourleys point.

Richard, maybe but the dollar has been weak before and overcame it but this time things are different. With the weak dollar this is of course good for US exporters but only if you have the right goods to sell and that the markets are their. I see a tendency that some major economies will protect their markets from "cheap" imports from the US, to be honest they have learnt this from the US, which for years used this as a successful weapon but this could be turned against them.

I certainly beleive that the EU will for sure protect their markets, they have in the last few years shown their willingness to do it and from a ever stronger position they will do it more often.

As for the WTO they are like the UN they talk a good fight but really don't and can't do anything, they are a toothless tiger.

"Its not the confidence in the dollar thats weak, its the confidence of outside investors have in the US economy."

I agree with most of what you said but not the above. I think there is very little confidence in the dollar. The Fed keeps printing dollars and Treasuries which the Chinese, the Japanese and the GCC continue to buy. The dollar is not backed by anything and the US is sitting on a mountain of debt the likes of which the world has never seen before. The dollar is in real trouble. What happens when the holders of all this debt start dumping it? The dollar will fall further.

The US economy is weak and interest rates are falling and will fall again today. This is putting further downward pressure on the dollar. I do agree that the oil producing countries will ditch the dollar. They have no choice.

Ironically while Americans may well become poorer, American businesses may well become richer as the compete and discover new markets. The big growth area for American companies is in selling services to the rest of the world. Americans are good at that.

Victory attained by violence is tantamount to a defeat, for it is momentary. Mahatma Gandhi

Ngourly, that maybe so but the problem for the dollar is not going to go away. The US had the largest economy for years with little or no great challange to it but things have changed. The Russians are expanding fast and have the natural resources and money, the chinese have the potential with their available labour and are using it, the Europeans are growing faster and stronger every year and are becoming more internally dependent.

The US dollar is taking a hit because its rivals are strong and getting stronger every day. No country can any longer live on its internal market, you have to export, you have to have goods that people want, at a price then can afford.

The export markets for the US are getting smaller and more competetive, major corporate take overs are producing larger competitors which are no longer American controlled. Its not the confidence in the dollar thats weak, its the confidence of outside investors have in the US economy.

Things will not get better, why should they, what can the US do about it, cosmetic actions but the base problem is not solved and wont be.

The European economy is growing, its base is growing, its expansion is a yearly thing. With every new memeber to the EU, even the presently weak economy ones, there influence and control grows. The EU has the maufacturing capacity, it has food at an abundance, it has technology, and slowly it has tap to the Russian power resources.

As I said on one other thread, its not a case of will the oil producers remove their Dollar tag, its a case of when.

Oil is priced in dollars. Although it's slightly inflationary for the Riyal to be tied to a weak dollar, Qatar, UAE and Saudi won't remove the peg until oil is traded against a basket of currencies, and it would take years for Opec to agree such a move.

The main problem affecting families' wealth in Doha is inflation in the housing market, which has nothing to do with the dollar peg.

I am happy. When I came 3 years ago 1QR = 26xx Now 1QR = 31xx WoW:) Sorry Richard ask for an Increment of QR 25,000 :)

You may be right Amnesia....mainting the peg is more harmful than helpful...but the pressure on the Qatari Government from the US can influence them to ignore it for now...Qatar is fine and have a MAJOR budgetary surplus.

I also heard that Kuwait was the ONLY gulf state removing the peg and that ALL the others still tow the American line. Also, there was talk of a common gulf currency, which seems to have collapsed with Kuwait's move to revalue its currency.

Stay safe all.

Perfection does not exist. The question therefore, is: what level of imperfection are we willing to settle for?

Alot of the gulf are removing the link to the dollar. Qatar has announced that they do not have any plans (of course to please the US), however this is a currency death-wish at the moment. We need to either move into a basket of currencies OR go with the Euro.

__________________________

Dry your eyes mate - it ain't so bad that it's not good for something.

For instance it's good for me :o)

- I took the blue pill and found myself alive in Qatar - wish I had taken the red and stayed in Europe

that the green back has not fallen against?

Victory attained by violence is tantamount to a defeat, for it is momentary. Mahatma Gandhi

No Soccermom, THEY had to pay HIM the 5 cents

"You don't have to like me for who I am but we'll see what you're made of by what you make of me." Ani Difranco

My mother told me that the Canadian dollar was higher than the American so why did he have to give them the 5 cents. If you think you have it rough. My husband left Canada to move here where he thought he was getting a increase in salery because when he left the American dollar was higher, now he is getting paid in the lower american dollar and we are sending home to Canada to pay our Mortgage! We are loosing twice the way I see it. P.S. anyone know a french tutor? or French clases in the Al Wab area?

Never say Never!

My brother just flew back through Washington DC and he paid at the airport with a Canadian dollar and insisted they give him his 5 cents change. :P

"You don't have to like me for who I am but we'll see what you're made of by what you make of me." Ani Difranco

My wife picked the worst time in 3 decades to go to Canada for the summer and I had to send her money =(

LOL

Perfection does not exist. The question therefore, is: what level of imperfection are we willing to settle for?

The American dollar has not been so low against the Canadian dollar since 1960. That even predates me by a few years!

Victory attained by violence is tantamount to a defeat, for it is momentary. Mahatma Gandhi

HEhehe The Canadian dollar is higher then the American! :D

"You don't have to like me for who I am but we'll see what you're made of by what you make of me." Ani Difranco

we are in the same boat Richard123