SOROS AND BUFFETT BETTING AGAINST U.S. DOLLAR!

The U.S. dollar continues its slow-motion collapse, spurred on now by
the news that both George Soros and Warren Buffett are 'speculating'
against the dollar [see http://www.nwointelligence.com/NEWMONTH.HTM].
"..There's a growing belief on Wall Street that the dollar is looking
like a one-way bet downwards."
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Dollar plunges to all-time low against euro
By Philip Thornton, Economics Correspondent
'Independent', UK
29 November 2003
Retailers braced for a miserable Christmas as shares tumble

Dollar plunges to all-time low against euro

Outlook: High street feels the chill amid Wal-Martisation of retail
sales

The dollar tumbled across the board yesterday, hitting an all-time low
against the euro amid fears that Wall Street was betting against the
US currency. The euro traded as high as $1.2018 - above $1.20 for the
first time - as the dollar slid to new multi-year lows against
sterling and the Canadian dollar and a six-month low against the Swiss
franc.

With American markets shut for Thanksgiving, traders focused on a
string of negative news on the dollar. including yesterday's report in
The Independent that the leading financiers George Soros and Warren
Buffett had taken "short positions".

Chris Furness, senior currency strategist at the online analysts
4CAST, said the move was "more psychological than anything else, and
related at least a small extent to early US traders reading the story
that both Soros and Buffett are betting on a dollar collapse".

Yesterday's fall added to the massive selling of the world's largest
currency, which has tumbled by 14 per cent against the euro so far
this year. The financial markets are growing increasingly concerned
that the US will not be able to attract enough investment to fund its
burgeoning current account deficit, which is running at record levels.

Lehman Brothers was the latest Wall Street bank to take a bearish
stance, warning its clients the dollar remained "unattractive" while
the Federal Reserve kept interest rates at four-decade lows. "By
insisting that rates remain at historic lows, the central bank has
only added to the doubts about the US recovery," the investment bank
said in its latest forecasts. "If, on the other hand, the Fed begins
hinting rates will head higher than we think, it could prove an
important turning point for market confidence in the US - maybe not
enough to turn the dollar's trend, but certainly enough to slow it
down."

On Thursday, Merrill Lynch, a rival investment bank, surprised the
markets by forecasting the dollar would tumble 8 per cent against the
pound to hit $1.85 next year.

Yesterday the pound rose to a fresh five-year high of $1.7238, its
strongest since October 1998. The pound has risen 1.6 per cent against
the dollar since the Bank of England raised interest rates. Most of
the burden of the dollar's depreciation has fallen on the euro as the
major Asian economies have defended their currencies against any
appreciation. China's renminbi is pegged to the dollar and the
administration has rejected overtures from the White House to allow
the currency to rise.

Japan, which is struggling with a decade-long downturn, has repeatedly
intervened to prevent the yen from rising and hurting its exporters.
It has spent a record ¥17.8 trillion (£95.9bn) so far this year on
keeping the yen down. Audrey Childe-Freeman, an economist at CIBC,
said: "The euro is benefiting by default. People don't want to sell
the dollar against the yen because of the threat of yen-selling
intervention, which leaves few other options."
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                          ______________________

Soros 'speculating against dollar'
Pound surges to five-year high against US currency. Buffett also said
to be betting against greenback
By Philip Thornton and Michael Jivkov
'Independent', UK
28 November 2003
Soros 'speculating against dollar'

Outlook: George Soros adds his weight to the case against the dollar

The pound surged against the dollar yesterday amid speculation that
Warren Buffett and George Soros, the world's most famous speculators,
are betting the US currency will plummet.

Sterling powered to a five-year high against the dollar for a second
day as concerns over the US current account deficit continued to
outweigh evidence of a rebounding economy.

Traders believe selling the dollar is a one-way bet, and some latched
on to rumours that speculators were building "short" positions on the
dollar - betting it will tumble in the coming months.

One hedge fund manager, who asked not to be named, said: "I have heard
that both Soros and Buffett are shorting the dollar. There's a growing
belief on Wall Street that the dollar is looking like a one-way bet
downwards."

A spokesman for Mr Soros, who famously "broke" the Bank of England
when the pound crashed out of the exchange rate mechanism a decade
ago, said he never commented on speculation. Mr Buffett was
unavailable for comment.

The surge in the pound to $1.7155, its strongest level since October
1998, was boosted after Merrill Lynch forecast the dollar would plunge
a further 8 per cent by the end of next year.

Demand for the dollar has waned on concern the country will not
attract enough capital to fund its record current account deficit,
which is expected to break through 5 per cent of GDP this year.

In a massive revision to its forecast issued on the eve of yesterday's
Thanksgiving holiday, Merrill Lynch said the pound would hit $1.85 -
which would be its highest level since 1992.

The blue chip Wall Street bank said sterling would rise on signs of
returning economic strength, rising interest rates and hope that the
Government won't raise taxes before a 2005 election. But it warned
that the surge in the pound would be short-lived as the concerns
overhanging the UK - from a budget deficit, huge consumer indebtedness
and a tight labour market - would come home to roost.

"Bubble trouble currencies such as the pound should continue to do
well for now," it said. "But upsides in the currencies in these
regions should end next year as tighter conditions threaten to burst
credit bubbles and shape market expectations of lower rates."

Merrill Lynch expects the dollar to tumble to $1.33 against the euro,
a drop of 12 per cent from yesterday's $1.19 value. But it cut its
forecast for the euro to surge to 80p against the pound - a level that
would smooth sterling's entry into the single currency - to 73p.

A surge in the pound against the dollar will be a boon for British
tourists but could cause headaches for both businesses and the Bank of
England.

Khuram Chaudhry, a strategist at Merrill Lynch, said: "UK investors
may find company sales exposure to the US unfavourable in this
scenario.A stronger domestic currency is likely to mean the Bank is
less likely to raise interest rates aggressively." David Bloom, a
global economist at HSBC who does not see the pound going much above
$1.70, said any spike in the pound would be short-lived. "If you want
to sell the dollar because you believe in the structural problems such
as the current account deficit then you buy the pound but there's a
downside because the UK is also looking a trade deficit, an indebted
economy," he said.

"If you think those factors will cause the dollar to fall then the
pound should fall as well."

He said the main beneficiary should be the euro, which has smaller
deficits - despite the high-profile row over the stability and growth
pact. He said HSBC was sticking with its historic forecast for a
dollar-euro rate of $1.35.

Mr Bloom warned that if the pound were to fall it could tumble even
further than the dollar as there would be little interest from other
countries to prop it up.
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Outlook: George Soros adds his weight to the case against the dollar
By Jeremy Warner
'Independent', UK
28 November 2003
Soros 'speculating against dollar'

Outlook: George Soros adds his weight to the case against the dollar

It was Thanksgiving in the United States yesterday, but that didn't
stop the dollar taking a further beating in foreign exchange markets.
The latest rumour to feed the frenzy is that George Soros, the man who
broke the Bank of England, has taken some sizable short positions in
the greenback. Unsurprisingly, Mr Soros won't say, but you don't have
to be a currency speculator as accomplished as Mr Soros to realise the
dollar is a one-way bet right now. Nor would Mr Soros's lack of faith
in the medium-term outlook for the dollar come as any surprise to
anyone who has read his thoughts on President George Bush.

Ensuring that Mr Bush is defeated in the next year's presidential
election "is the central focus of my life", he was quoted as saying in
The Washington Post. "It is a matter of life and death." The
74-year-old financier's opposition to Mr Bush is based on his belief
that "Bush is a danger to the world" rather than that he may be
mismanaging the US economy. In any case, what Mr Bush is trying to do
with the economy is perfectly obvious; he's pump priming it for a
second term, knowing that once home and dry, he can repent at leisure
for the present profligacy.

Is Mr Bush, then, a long-term danger to the US economy too? The US is
growing faster than almost anywhere else right now, but it doesn't
fool the currency markets. About the only foreigners still buying
dollar assets are the Chinese and the Japanese, who must keep their
own currencies weak against the dollar to support the competitiveness
of their US exports. Everyone else seems to be a seller. If there is
no foreign funding for the ever-growing US trade deficit, then the US
currency must fall until trade is brought back into balance.

This in turn helps growth and employment in the US. In combination
with tax cuts, high federal spending and historically low interest
rates, it is just what Mr Bush needs to win the next election. A sharp
currency devaluation is worth any number of protectionist trade
tariffs and, what's more, it is legal. Paradoxically then, Mr Soros
may actually he helping Mr Bush if it is true he's a big dollar
seller. Certainly he advanced just such a justification when he
bounced the pound out of the ERM 11 years ago. His actions, he argued,
were a boon to the UK.

The dollar will continue to fall, until eventually it overshoots and
the next great shift in trading sentiment takes place. That may still
be some distance off. Time to book that shopping trip to New York, I
would suggest....
                      
     [FAIR USE POSTING, for educational and discussion purposes]