Market News
Intervention to halt dollar merely gives it legs - REUTERS
By Mike Dolan
LONDON, Dec 20 (Reuters) - The U.S. dollar's latest surge has forced central banks around the world to lean against it, selling greenback reserves to stabilise local currencies but potentially exaggerating dollar strength into the bargain and sowing problems down the line.
If hard cash reserves, typically banked in U.S. debt, are run down sharply, it may just aggravate Treasury yields higher at the margins and bolster one of the main reasons for dollar strength in the process. Until tightening Treasury yields eventually force foreign capital out of "exceptional" U.S. markets at large, the process could spiral from here.
