Wednesday, December 27, 2006

U.A.E. Central Bank Is Selling Dollars, Buying Euros

Dec. 27 (Bloomberg) -- The United Arab Emirates will convert 8 percent of its foreign-exchange reserves to euros from dollars before September after the U.S. currency slumped this year, the country's central bank governor said.

The U.A.E. has started ``in a limited way'' to sell part of its dollar reserves, Sultan Bin Nasser al-Suwaidi said in an interview in Abu Dhabi on Dec. 24. ``We will accumulate euros each time the market appears to dip,'' as part of a plan to expand the country's holding of euros to 10 percent of the total from 2 percent today, he said.

The U.S. current account deficit widened to $225.6 billion in the third quarter, while oil producers in the Middle East and central Asia will run a surplus of $322 billion for all of 2006, according to the IMF. Total foreign holdings of Treasuries increased to a record $2.16 trillion in September, just under 50 percent of the $4.34 trillion outstanding.

China, the second-largest holder of U.S. debt, reduced purchases of U.S. treasuries by 1.7 percent in the first 10 months of the year, according to Treasury Department data. Continue reading ...

While Dubya continues to pour our lifeblood, both literally and figuratively, into the sands of Iraq, the rest of the world grows more concerned over their holdings in US dollars. America’s middle-class may yet pay a great price for having elected such an incompetent fool.


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