Posted tagged ‘currency trading’


June 11, 2008

Erle Frayne  Argonza

Good afternoon from Manila!

Fellows of Planet Earth, better prepare yourself for the eventualities that have become a fact of life: high gas prices, and high food prices. Let me focus here on high gas prices, although gas and food are very much inter-related.

The good news for those workers and businesses that utilize the US dollar for their transactions is that the dollar will be quite strong for a time. My own forecast is that, over the next twelve (12) months at least, the strong dollar stays. The dollar is used to transact oil, remember, so you’d see its strength sustained for a time as oil price hikes will be the ‘event of the moment’ in the short run.

The dollar was actually already in the downward trend, moving rapidly towards a crash from middle of 2007 onwards. The US recession came, confidence in the dollar was low, and so the currency traders desired so strongly to unload as much dollar as they can before it would go up again.

To make things more hair-raising, the global financiers actually wanted the dollar to get crashed like smashed potato. The financiers’ problem last year was:  which currency to substitute for the dollar given that Uncle Sam’s currency remains as the international legal tender, thanks to the Bretton Woods agreement that ensured this role for the same currency.

The options eventually narrowed down to just two: the (a) Euro or the (b) pounds sterling. Some quarters among the financiers were for the pounds sterling, and it seemed this dominated financier mindsets last year, though there were insiders who opted for the euro.

The next question was, granted that a currency option war clear, say that the pounds sterling will be the currency of the moment, will the volume of pounds across the globe suffice to make a sweeping decision to dump the dollar? The volume of dollars across the globe is simply gargantuan, it just isn’t that easy to play God with this currency.

Finally, at the end of the day, with speculators playing around to keep gas prices up, the forced decision was for the dollar to stay after all. This is, in fact, a revenge of Uncle Sam on those predatory forces who simply wish to play God with currencies and destroy national economies without compunction, no matter if many poor lives will be dead in their crashing effects.

On the other hand, Anglo-American oil men are having a field day as speculative trading has shifted to their side for some time, and will be so for at least twelve (12) months. The US dollar’s downward spiral has been put on hold for a time, and the said oil men will be happier by many folds in the months ahead as their purses will bloat to Glad Tidings.

Fellows, accept this as a fact of life: oil prices will be up. Prepare your necessary contingency measures as their effects will be upon you.

[11 June 2008, Quezon City, MetroManila]