From Reuters:

“Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.

Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.”

[my emphasis]

Comment:

OK, that’s why we’ve seen such a slide. Yesterday’s bombshell followed by this…and, you have to admit, the dollar has had a long run up.

Notice how Persaud phrases the request (it’s later in the piece).  It goes something like – the US is sick of all this foreign savings that’s making us run deficits…or to quote him:  “Today the Americans complain that when the world wants to save, it means a deficit.”

Meanwhile, I am berating myself for again trying to squeeze the last drop out of a trade. I did move a bit into Aussie and NZ last week but I really didn’t see that FOMC announcement coming.

I can’t believe that Bernanke would be so gung-ho. I thought he’d at least make some nod to prudence. But I guess that announcement on Sunday was his preparation of the public. Also, an important item missed me. Which was declining Chinese exports, to the US and in general.

But in my defense, I still think that was an incredible, historic  move on Bernanke’s part.

Which just shows you that in trading you shouldn’t be predicting, you should be preparing.

Sigh.

Meanwhile, I still think we’ve been subjected to a propaganda drama the past few weeks (aren’t we always?) – mainly to take our eye off the ball. And having that suspicion, I’ll hunt around to figure out what this was all about

Here’s Kathy Lien on some advantages of a weak dollar

  “McDonald’s is not the only company to warn about weaker earnings due to foreign currency fluctuations. This morning, United Technologies announced plans to lay off 11,600 workers as a rising dollar and deteriorating economic conditions force the company to cut back. Last week, Burger King Corp and Estee Lauder also announced that their profits dropped as international sales translated into fewer dollars.$3.60….. A strong dollar also negatively impacts U.S. companies selling products abroad because it reduces their competitiveness…..

As for merger and acquisitions, a strong dollar reduces the cost for U.S. companies to takeover foreign companies but increases the cost of foreign companies buying U.S. companies. The reason why we consider it a disadvantage at this time is because M&A flow could go a long way in supporting the U.S. stock market, which even with today’s rally is down almost 25 percent year to date.”

OK, Lila here again.

What if this dollar take-down was intended? Why do I say this?

1. The report about declining bond purchases from China came out on Monday only this past week. But I think they must have had it for some time. There’ s been incessant posturing and tough talk toward China in a rather coordinated way.

2. Unemployment is rising rapidly and businesses are shrinking.

Here’s the Bureau of Labor Statistics  report of March 19

“Unemployment rates were higher in January than a year earlier in 371 of 371 metro areas and unchanged in 1 area. 14 areas recorded jobless rates of at least 15.0 percent today. Fourteen areas recorded jobless rates of at least 15.0 percent, while 23 areas registered rates below 5.0 percent. The national unemployment rate in January was 8.5 percent, not seasonally adjusted, up from 5.4 percent a year earlier.”

3. The only way to get foreigners to pump money into the economy is to encourage them to buy US assets and businesses (that’s what this is for).

4. It offsets all the criminal rot in the financial sector which turns off foreign investors..

So – was this another shot fired in the currency wars? I suspect something like that.

Given all that, the dollar really didn’t do that badly.  (I told you I’m a contrarian)

Ever since that slide to 71 or so, I’ve gotten a stomach of cast iron. So what if  this was the dollar index’s biggest one-day drop in 20 years? It’s been around twice as long.  What the Benny-Bama team has been sticking to the markets is the worst in our history.