Could the devaluing Dollar be volatile in the future?
*Bloomberg, by Min Zeng, December 3, 2007
“At a time when everyone from billionaire investors such as Warren Buffett and Bill Gross to celebrities want nothing to do with the dollar, a growing number of strategists say the stage is being set for a rally in 2008.
The U.S. budget and trade deficits are narrowing in tandem for the first time since 1995, when the currency gained 8 percent as measured by the Federal Reserve’s U.S. Trade Weighted Dollar Index.
‘I am confident that the dollar will have a significant rally next year, especially against the euro and the pound,’ said Stephen Jen, the London-based head of currency research at Morgan Stanley, who expects the U.S. currency to strengthen to $1.35 by December 2008. `The deficits are shrinking fast.’
The dollar weakened to $1.4661 against the euro at 9:07 a.m. in New York, from $1.4633 at the end of last week.”
While Berkshire Hathaway Inc. Chairman Buffett and Gross say investing in U.S. financial assets is a losing proposition as the nation’s economic and political dominance wanes, improvements in the deficits may provide a respite for the dollar after it tumbled 12 percent this year.”
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