[Marxism] Dollar slides as Russia questions reserve status - Forbes.com

[Greg McDonald <sabocat59@xxxxxxx>]

http://www.forbes.com/feeds/ap/2009/06/16/ap6548940.html


Associated Press
Dollar slides as Russia questions reserve status
Associated Press, 06.16.09, 09:33 AM EDT
pic

NEW YORK -- The dollar gave back some of its day-ago gains after  
Russian officials called for the creation of new reserve currencies  
in addition to the dollar and said the country may invest part of its  
currency holdings in bonds issued by Brazil, China and India.

The 16-nation euro rose to $1.3903 in morning trading in New York  
from $1.3788 late Monday. The British pound rose slightly to $1.6468  
from $1.6342, while the dollar slipped to 97.05 Japanese yen from  
97.65 yen.

President Dmitry Medvedev told a regional summit on Tuesday that the  
creation of new reserve currencies in addition to the dollar is  
needed to stabilize global finances.

"No currency system can be successful if we have financial  
instruments denominated in just one currency," Medvedev said in a  
regional meeting ahead of the so-called "BRIC" summit Tuesday of  
major emerging economies Brazil, Russia, India and China.

Medvedev's economic adviser Arkady Dvorkovich also said Russia may  
move some of its currency reserves into bonds issued by the other  
BRIC countries if they reciprocate in kind. He also pushed for bigger  
inclusion of the Russian ruble, Chinese yuan and gold to the  
International Monetary Fund's basket of currencies.

Chinese officials have also pushed for expanding emerging economies'  
representation in the IMF's "Special Drawing Rights" basket,  
currently made up of the euro, yen, pound and dollar. SDR's have  
served, in limited use, as a reserve asset since 1969.

However, Dvorkovich urged for any action on a new global reserve  
asset to take place slowly.

"Least of all now we need shocks at the currency markets," Dvorkovich  
said during the meetings in Yekaterinburg, Russia. "Any additional  
shocks are bad during the crisis. No one wants to bring the dollar  
down."

Medvedev has long pushed for new reserve assets, and Russian Finance  
Minister Alexei Kudrin said over the weekend that the dollar's status  
as the world's main reserve currency wasn't likely to change soon.  
Kudrin has been one of several top Russian officials raising concerns  
about the dollar in recent months.

Officials from Russia, China and Brazil have said in recent weeks  
that they would invest in bonds issued by the International Monetary  
Fund to diversify their dollar-heavy currency reserves.

China is Washington's biggest foreign creditor, holding an estimated  
$1 trillion in U.S. government debt. The four BRIC countries together  
make up almost a third of foreign countries' total Treasury holdings  
as of April 2009, according to the Treasury Department.

The Treasury on Monday said that foreigners, including China and  
Japan, the two biggest buyers of U.S. government debt, cut their  
Treasury holdings in April - triggering worries that foreign central  
banks and sovereign funds will no longer be willing to fund the U.S.  
government's ballooning deficits.

Other factors hurting the dollar Tuesday included the German ZEW  
survey on economic confidence, which registered its eighth straight  
month of improvement in June.

The ZEW said its economic sentiment index rose to 44.8 in June from  
31.1 last month. Germany is the euro zone's biggest economy.

In Japan, meanwhile, the central bank said the economic conditions in  
the world's No. 2 economy "after deteriorating significantly, have  
begun to stop worsening." Exports and production have both improved,  
the central bank said.

Associated Press Writer Vladimir Isachenkov contributed to this  
report from Yekaterinburg, Russia


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