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Soros Critical of Dollar Policy

The financier says that allowing the greenback to slide will hurt Europe's growth. Buck hits multiyear lows.

May 21, 2003|From Bloomberg News

The debate over the Bush administration's policy toward the dollar was joined Tuesday by hedge fund operator George Soros, who said the White House is making a mistake to let the currency slide.

At the same time, Soros indicated he is selling the dollar -- and so were other traders on Tuesday, driving the buck to new multiyear lows.

"I have a short position against the dollar because I listen to what the secretary of the Treasury is telling me, so who am I to stand in the way?" Soros told cable channel CNBC.

The euro ended in New York at $1.167, up from $1.164 on Monday. The Canadian dollar rose to 73.9 U.S. cents, up from 73.4 cents. The Swiss franc ended at 77.5 U.S. cents, up from 77 cents.

Treasury Secretary John W. Snow triggered the dollar's latest slide after he suggested over the weekend that he is comfortable with the currency's fall.

Snow said a "strong" dollar is one that inspires confidence and is difficult to counterfeit. He did not make reference to its value against other currencies.

To many traders, the comments indicated that the Bush administration wants a weaker dollar to help boost the U.S. manufacturing sector. A lower dollar makes U.S. goods cheaper abroad and foreign goods more expensive for Americans.

Snow "announced a change in American attitudes, and I think it's a mistaken one," said Soros, head of Soros Fund Management, the world's biggest hedge fund with $11.5 billion in assets.

"It's a beggar-thy-neighbor policy" because a weaker dollar against the euro will curb European growth, Soros said.

Given the apparent change in U.S. policy, Soros said he is betting the dollar will fall further against the euro as well as against the Canadian, Australian and New Zealand dollars.

Snow and Treasury spokesman Rob Nichols declined to comment on Soros' remarks. But the White House on Tuesday again insisted there has been no change in its desire for a "strong" dollar.

Separately, Germany's economics minister said Federal Reserve Chairman Alan Greenspan assured him the U.S. has no intention of undermining the value of the dollar.

"No government would try to weaken their currency deliberately," Wolfgang Clement said, paraphrasing Greenspan's remarks from their meeting Monday in Washington.

Some traders said the dollar's slide may accelerate after the U.S. government Tuesday raised its terrorism-alert warning to the second-highest level, citing increased signs that terrorist groups are planning attacks in the U.S. or against American interests abroad.

Fears of attacks may crimp foreign investment in the U.S., analysts said.

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