Kuwait drops dollar

Fish · 05-27-07, 01:09 PM

Quote:

By Ulf Laessing
KUWAIT, May 20 (Reuters) - Kuwait unshackled its dinar from the tumbling U.S. dollar on Sunday and switched the exchange rate mechanism to a basket of currencies, throwing plans for currency union with other Gulf Arab oil producers into disarray. Kuwait's central bank, which battled speculators for weeks to defend the peg, said the dollar's slide against other currencies had forced it to break ranks with fellow Gulf states to contain inflation from the rising cost of some imports.

The move stunned Gulf currency markets and volumes dried up. The impact would be clearer on Monday when international markets open, said Steve Brice, chief middle east economist at Standard Chartered Bank in Dubai.
Oman and Bahrain, the two smallest Gulf economies, and Saudi Arabia, the largest Arab economy, said they planned to stand by their pegs. There was no comment from the central bank of the United Arab Emirates, whose currency could take centre stage on Monday as prospects for a single currency evaporate.
Kuwait was still committed to monetary union, the central bank governor said in a statement, after changing the dinar's rate to $0.228806, an appreciation of about 0.37 percent. "The massive decline in the dollar's exchange rate against main currencies ... has contributed to the increase in local inflation rates and this step is part of the central bank's efforts to curb inflationary pressure," Sheikh Salem Abdul-Aziz al-Sabah said in a statement carried by state news agency KUNA.

More here:

http://yahoo.reuters.com/news/articl...mktNews&rpc=44[/url

Skybird · 05-27-07, 05:25 PM

Just wait for when China decides to convert it's Dollar reserves into Euros. Wallstreet's "Black Friday" will appear to be a harmless joke, compared to that.

Ishmael · 05-27-07, 08:11 PM

Quote:

Originally Posted by Skybird

Just wait for when China decides to convert it's Dollar reserves into Euros. Wallstreet's "Black Friday" will appear to be a harmless joke, compared to that.

They won't do that until they're ready to take Taiwan. That way the US won't be able to afford the fuel to get over there to stop them.

Sea Demon · 05-27-07, 08:32 PM

If China maliciously dumps the dollar in this type of economic warfare, we may have to be ready to destroy China using any means possible (nuclear if necessary). It's a crappy option, but one we may have to exercise under this type of dire, chaotic, life threatening, and dangerous circumstance. I would expect my government (USA) to exact a painful retaliation 10 fold.

Skybird · 05-28-07, 04:13 AM

Spoken by testicles, not by brains.

Fish · 05-28-07, 04:19 AM

Quote:

Originally Posted by Skybird

Spoken by testicles, not by brains.

I thought he was joking.

Sea Demon · 05-28-07, 09:37 AM

Quote:

Originally Posted by Skybird

Spoken by testicles, not by brains.

No. Spoken by a sense of survival. Doesn't have anything to do with parts of the body at all. If China is building large foreign exchange reserves in dollars simply so they can drop an economic bomb, such as dumping them quickly and completely so as to prevent US military action, or stop oil deliveries to America.....that's just like dropping a bomb of destruction. That means simple deliveries of food within America may be disrupted to the point of non-delivery. I don't know about you, but not being able to eat is hazardous to your health where I come from. With that said, the nuclear option is only the most extreme. And it is the least desirable. But indeed, I would expect the US government to retaliate in a way that would make them pay an ultimate price. China needs to know that economic warfare is not in their interests, and will be painful to them if they partake in it.

If they want to exchange their foreign reserves nominally, then they should do so. But nevertheless, I'm willing to bet that they will not do so at all. The Euro as a long term option ain't that good as is. With a large, yet rapidly shrinking, and aging population sucking on government pensions, and a burgeoning low skilled/hostile Muslim infusion in Europe.....I wouldn't bet on it.

NefariousKoel · 05-28-07, 04:22 AM

Quote:

Originally Posted by Ishmael

Quote:

Originally Posted by Skybird

Just wait for when China decides to convert it's Dollar reserves into Euros. Wallstreet's "Black Friday" will appear to be a harmless joke, compared to that.

They won't do that until they're ready to take Taiwan. That way the US won't be able to afford the fuel to get over there to stop them.

Hell, I can barely afford to drive to work these days as it is.

05-27-07, 05:25 PM	#2
Skybird Soaring Join Date: Sep 2001 Location: the mental asylum named Germany Posts: 42,616 Downloads: 10 Uploads: 0	Just wait for when China decides to convert it's Dollar reserves into Euros. Wallstreet's "Black Friday" will appear to be a harmless joke, compared to that. __________________ If you feel nuts, consult an expert.

05-28-07, 04:13 AM	#5
Skybird Soaring Join Date: Sep 2001 Location: the mental asylum named Germany Posts: 42,616 Downloads: 10 Uploads: 0	Spoken by testicles, not by brains. __________________ If you feel nuts, consult an expert.

05-27-07, 08:32 PM	#4
Sea Demon Ocean Warrior Join Date: Mar 2004 Location: USA Posts: 2,552 Downloads: 33 Uploads: 0	If China maliciously dumps the dollar in this type of economic warfare, we may have to be ready to destroy China using any means possible (nuclear if necessary). It's a crappy option, but one we may have to exercise under this type of dire, chaotic, life threatening, and dangerous circumstance. I would expect my government (USA) to exact a painful retaliation 10 fold.