Dollar Drops on Reserve Currency Doubts

Breitbart (Link) - AFP (June 17, 2009)

The dollar fell against the euro and yen on Wednesday after major emerging economies cast doubt on its long-term future as the world's main reserve currency, dealers said.

In late morning trading in London, the European single currency climbed to 1.3867 dollars from 1.3838 dollars in New York late on Tuesday.

Against the Japanese currency, the dollar slipped to 96.30 yen from 96.42 yen on Tuesday.

Leaders of the so-called BRIC nations -- Brazil, Russia, India and China -- had on Monday called for a "more diversified" currency system.

"The BRIC leaders are divided between supporting the US dollar -- as it is the only choice for now -- and advancing the march for an alternative," said Phil McHugh, who heads the corporate foreign exchange desk at currenciesdirect.com.

"The (BRIC) meeting... will affect future sentiment on the dollar," he added.

Elsewhere on Wednesday, investors awaited an announcement from US President Barack Obama on reforms of the financial system.

Obama was expected later in the day to propose wide reforms that would result in the Federal Reserve gaining broad powers and a national bank supervisor being created to avoid a repetition of the financial turmoil.

It will be the first major bid to overhaul the highly complex US financial regulatory network since a US home loan meltdown shook the core of the system and sent global markets into a tailspin.

"We're going to make sure that we've got a systemic regulator, somebody who can oversee the entire system and, when you start seeing the kinds of risks that we saw being taken in this last crisis, that we can catch it before the crisis occurs," Obama told financial news channel Bloomberg Television.

Officials told a media briefing that Obama would propose a Financial Services Oversight Council led by the Treasury Department to oversee supervision of the financial system.

In trading here on Wednesday, the euro was changing hands at 1.3867 dollars against 1.3838 dollars late on Tuesday, at 133.52 yen (133.45), 0.8486 pounds (0.8434) and 1.5086 Swiss francs (1.5059).

The dollar stood at 96.30 yen (96.42) and 1.0881 Swiss francs (1.0881).

The pound was at 1.6338 dollars (1.6402).

On the London Bullion Market, the price of gold edged up to 934.08 dollars an ounce from 934 dollars an ounce late on Tuesday. †

America ~ Economic Crisis