Against the pound, dollar’s losing its weight

Stephen Beard Apr 19, 2007
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Against the pound, dollar’s losing its weight

Stephen Beard Apr 19, 2007
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BOB MOON: The dollars in your wallet lost even more of their buying power overseas today. Currency traders are betting that U.S. interest rates could start falling soon, and that would make the greenback less appealing to foreign investors.

The dollar has dipped against the yen, the euro and the Swiss franc.But its most stunning fall in recent days has been against the British pound.The exchange rate has now topped $2 for every pound.That’s a 26-year high for the British note.

Good for Britain? Not necessarily, as Marketplace’s Stephen Beard explains from London.


STEPHEN BEARD: The British pound is riding high and humbling the once almighty dollar. But the Brits shouldn’t kid themselves, says fund manager Justin Urquart Sewart.

JUSTIN URQUART-STEWART: Britain would be deluding itself if it feels that sterling is reflecting its strength as an economy.

Sterling has soared, he says, because inflation is rising. It’s just hit 3.1 percent. And that, says economist Andrew Hilton, could spur action from the central bank.

ANDREW HILTON: The general feeling is that the British economy is overheating. And that because it’s overheating, the Bank of England is going to raise U.K. interest rates.

Britain’s bottom line could get a caning. And says Andrew Hilton British exporters could suffer double punishment with the stronger pound.

HILTON: British exporters are going to have a very tough time. British goods are going to be expensive in foreign markets.

Over the summer, thousands of Brits are expected to descend on New York swaggering around with their pounds, snapping up iPods on the cheap. But the spending spree may soon fizzle. The pound — and the Brits — may not be riding high for long.

In London, this is Stephen Beard for Marketplace.

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