Dollar hits 26-year low against pound

Source: Guardian Unlimited

The pound climbed to $2.10 for the first time since 1981 this morning, boosted by speculation that China was preparing to shift its foreign reserves out of dollars.

By 10.30am, one pound was worth $2.1053. The dollar, which has been weakening for several weeks, also hit a new all-time low against the euro of $1.4703.

Analysts said today's falls had been sparked by comments made by Cheng Siwei, vice chairman of China's National People's Congress. He told a Beijing conference on Tuesday that China would "favour stronger currencies over weaker ones, and readjust accordingly".

A vice director of China's central bank, Xu Jian, was also quoted as telling the conference that the dollar was "losing its status as the world currency".

Read more: http://business.guardian.co.uk/story/0,,2206584,00.html

Are we taking bets?

This is truly frightening...

At the moment it is the PR China who are offloading some of their Dollar assets. But earlier this year the Russian Federation sold a lot of its Dollar reserves in favour of Euros and Pound Sterling.

The Euro is seen as a safe haven at the moment because the Eurozone is in the middle of an economic expansionary cycle, which makes Eurozone investment seem attractive. With the USA edging towards a recession, all other major commodities and capital goods (gold, oil, Euros, Pounds, Loonies, Australian/NZ Dollars, Yen, Renminbi) are seen as more attractive for those wishing to sell Dollar assets.

all they have to do is stop buying our debt. We barrow on the order of 200 billion a month just to pay the interest.

All they have to do, come the t-bond auctions is not bid.

You want to know what the collective sound of several dozen assholes make when they all tighten at once in washington is like? You will find out then.

the Repukes say the economy's never been better!