Since local currencies
have appreciated relative to the U.
The Coalition noted that four Asian countries (China, Japan, South Korea and Taiwan) increased their foreign currency reserves by $250 billion during the first six months of 2004 by buying dollars in an effort to maintain undervalued levels for their currencies
By keeping Asian currencies
undervalued, it was partly to blame for Asia's shift to an economic structure that is overly dependent on exports.
Observes Caterpillar CFO Lynn McPheeters, "We were dollar-based and they were yen-based, and when currencies
got out of whack, it created a significant competitive advantage for them.
The dilemma they face may nor go away soon, as most observes of world currencies
do not see conditions tilting euro.
Steil advocates what other one-worlders have previously proposed: supplanting national currencies
with three world currencies
--the dollar, the euro, and an Asian currency.
But the dollar still has five times the presence of the euro as a foreign reserve currency, which is a pretty good indication of how the two currencies
stack up against one another.
Conversion of positions in legacy currencies
to the euro may inadvertently create a straddle transaction to which the loss deferral rules of Sec.
Beyond these business transactions, there is speculation: the purchase of currencies
purely to make money.
Finance ministers and central bankers from most of the 11 participating EU nations will meet in Brussels today to freeze the relative value of their national currencies
- a move to keep them from fluctuating with each country's financial fortunes.
As renegade economist Hazel Henderson puts it, "Local barter systems and local currencies
flourish when a country is managing its affairs inappropriately.
For example, when profit margins are tight, a relatively small change in the value of currencies
can wipe out the profit of the transaction; during such times daily or even hourly conversions may be necessary.
DBV will offer investors access to the Deutsche Bank G10 Currency Future Harvest Index(TM), which is designed to capitalize on the trend that currencies
associated with high interest rates, on average, tend to rise in value relative to currencies
associated with relatively low interest rates.
The governments would agree that they would not intervene in foreign exchange markets to affect the value of their home currencies
against either of the remaining two, unless one of the other two players agreed to intervene as well.
A true multi-currency solution can be permitted to track the data of up to four currencies
simultaneously - while running charts of hundreds of other currencies
for use in offices with multiple reporting needs.