Don’t Cry For My Bush Boom, Argentina

From Holden:

The Bank of Korea is dumping its dollars in favor of the euro, as well as Australian and Canadian currencies, sending My Bush Boom down South America way.

The dollar fell sharply in the foreign-exchange markets today after the Bank of Korea disclosed plans to step up its purchases of securities denominated in other currencies.

The steep decline highlighted the continued weakness of the dollar, which stabilized early this year after hitting a record low of $1.3666 against the euro on Dec. 30 and raised the possibility that the American currency could fall further at any time.

“The markets are so skittish right now that seemingly marginal news can have a big impact on the dollar,” said Julian Callow, chief European economist with Barclays in London.

The dollar lost more than 1.5 cents in value against the euro, which rose to $1.3229 in afternoon trading in New York from $1.3068 late Monday. It also weakened against the Japanese yen, dropping to 104.21 yen today from 105.54 yen the day before.

Australian and Canadian currencies also gained against the dollar, as the Bank of Korea indicated, in a report to the South Korean parliament, that it might keep some of its reserves in those currencies instead of the dollar. The South Korean won posted gains as well.