Reply #20: India goes euro? [View All]

[aneerkoinos]

"USDCHF

The dollar gained ground during the US session as both European and Japanese officials expressed their desire to curb currency movements. However, as we mentioned earlier, the effects of verbal intervention from Europe and suspected overt intervention by the Bank of Japan should be relatively short-term. More interestingly, an announcement by the Reserve Bank of India (RBI) went unnoticed by the market. The RBI is exploring the option of shifting a part of the central bank's reserves from US dollar based short-term securities to European gilts. India currently has the world's sixth largest store of reserves at slightly under $107 billion. This compares to Japan's reserves of approximately $673 billion and China's reserves of approximately $403 billion. We have been warning about the possibility of a capitulation of US treasuries by Asian central banks for months. Although the RBI is only considering it at this point, it indicates that second tier central banks are looking at moving reserve positions out of the dollar. If they outline plans to do so, the effects on the dollar would be dire."

more:
http://www.dailyfx.com/article_daily_fundamentals_021804.html