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Mon, Oct 12, 2009 - Page 10 News List

ANALYSIS: Greenback facing ‘power shift,’ analysts say

ROLE OVER?A report in the ‘Independent’ that several countries were planning to drop the dollar for oil trades, though denied, indicates the dollar’s supremacy may be ending

AFP , LONDON

“Despite what the Fed and other central bankers say, a weaker dollar is desirable because it is necessary to rebalance the global economy,” he said.

“As long as the decline is gentle and orderly, then they’re happy. But aggressive selling would spook the markets,” he said.

Commerzbank currency analyst Antje Praefcke agreed that the market’s reaction was significant because it showed that the dollar was on a downward trajectory.

“The questionable article in the Independent was of course disclaimed,” Praefcke said. “It is nonetheless an interesting study of the pscychological factors which are currently putting pressure on the dollar. Even if conspiracy theories turn out to be nonsense, the dollar is subsequently able to retrace only some of its losses.”

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