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Tuesday, May 31, 2005

Dollar Dump: Asian Banks Increase Ties

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Dollar Dump: Asian Banks Increase Ties
by Hale Stewart

Asian Central Banks Currently own about 1.1 trillion in US debt, making them the largest US creditors. However, these banks appear to be growing tired of this role. Starting with China then followed by Japan and South Korea, all three central banks have publicly stated they will start to move away from their position as US creditors, meaning they would purchase fewer US Treasury bonds. Next, all three also retracted this statement within 24 hours. However, according to Treasury International Capital data, all three are now purchasing far fewer US Treasuries than before. In other words, the data indicates the first statement from these banks was in fact their actual policy while the second statement was merely to prevent a selling panic in the market.

Next, Asian banks formed the Bellagio Group, a group consisting of all the major Asian central banks. Considering the growing interdependence of Asian economies, this group seems to be a natural step in the process of furthering regional interdependence. However, China, Japan and South Korea are all members. This indicates the group’s covert purpose may be to figure out a way to extricate themselves from the position of US creditors.


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Time to watch what's happening with the overseas dollar markets. Did I really say that?

Your Peterscope for June says that June is a good month to pay off your outstanding credit card debt before those minimum monthly interest payments and rates go up!

Peter

The Peter Files is NOT qualified to give financial, legal or romantic advice.

The Peter Files is qualified to run around n circles yelling "The sky is falling, the sky is falling" with no guarantee of any atmospheric plumeting.
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