Final Word from Wednesday, December 22, 2004





Daniel Kozel, KB's senior analyst for economic & strategic research, applauded the choice of a possible run on the dollar as our topic yesterday but said we were wrong to suggest that panic selling of the dollar would drive up Czech interest rates. The EU and CR would have to offset a sudden appreciation of their currencies by cutting rates, he said. Let's hope, he added, that the dollar's fall will be gradual and orderly. Another reader said that China will see to this. It will always take up any excess dollars, he said, in order to avoid a dollar crash and a ripple effect in Europe. By buying euros with its dollars, he argued, it's controlling the supply and demand for euros and is using this to help take over the European consumer-goods market, the way it already dominates in the U.S. For Czechs, this means cheaper dollars and cheaper Chinese goods in the future. [Komerční banka European Union currency National Bank]

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