Forex investors see new president helping dollar

Currency investors are not particularly enamored with either of the two U.S. presidential candidates but they are more than ready for change after the U.S. dollar's 33.8 percent decline under President George W. Bush.

Bush has presided over the worst drop in the dollar of any U.S. President since the developed world moved to flexible exchange rates in the early 1970's.

And though analysts are not completely blaming Bush for the dollar's slump, they say neither Republican Senator John McCain or Democrat Barack Obama can do any worse.

"One would think that just about anyone would be an economic improvement on one of the most reckless fiscal presidents we've ever elected," said Chip Hanlon, president of Delta Global Advisors, Inc. in Huntington Beach, California.

The New York Board of Trade's dollar index, which measures the dollar against a basket of six currencies, has lost 33.8 percent since Bush first took the oath of office on January 20, 2001. From a peak in July, 2001, the slide is even more dramatic at 39.3 percent.

Based on the dollar's performance, Craig H. Russell, Beijing-based chief market strategist for China at Saxo Bank, says the Bush presidency has been more unpopular than the era of President Richard Nixon, who eventually resigned the White House in disgrace after being implicated in the Watergate scandal.

Nixon closed the so-called gold window on August 15, 1971, effectively ending the dollar's ties to gold prices and the system of fixed exchange rates in place since World War Two.

China launches new forex transfer system

On Friday, China launched its inter-bank foreign currency payment system to smooth foreign exchange transfers on the Chinese mainland. But the People's Bank of China said the new system is limited to forex transfers for enterprises, and it doesn't cover across-the-board forex transfers.

The multi-currency forex payment system covers eight currencies, including the euro, the Japanese yen, the HK dollar and the US dollar. It will shorten the forex transfer time and increase efficiency.

The central bank said so far, eleven Chinese banks have joined the system. These include the country's big-four state-owned banks, Shanghai Pudong Development Bank and Industrial Bank. It added that more players, including overseas banks, can also take part in the system based on their payment needs.

India's forex reserves at $307.107 bn

MUMBAI: India's foreign exchange reserves fell to $307.107 billion as on July 18, from $308.520 billion a week earlier, the central bank said in its weekly statistical supplement on Friday. Reserves rose to a record $316.171 billion in late May and analysts say the decline since then is due to dollars given by the central bank to refiners in exchange for their oil bonds and intervention in the currency market to support a falling rupee.
The central bank said foreign currency assets, expressed in dollar terms, included the effect of appreciation or depreciation of other currencies held in its reserves such as the euro, pound sterling and yen.
The foreign exchange reserves include India's Reserve Tranche Position in the International Monetary Fund, the central bank said.

dollar slips amid persistent US bank worries

1. Dollar falls on continued worries about U.S. financials
2. Sentiment toward dollar remains cautious
3. Investors watching U.S. earnings, oil prices
July 21 - The dollar slipped on Monday, losing some of its recent momentum, after better-than-expected earnings from Bank of America failed to convince investors that the worst for the U.S. financial sector is over.
The greenback had earlier gained against the yen and pared losses against the euro after Bank of America's second-quarter earnings beat a Reuters Estimates forecast, boosting U.S. stocks.

But investors remained wary ahead of a flurry of bank earnings due this week, including Wachovia (WB.N: Quote, Profile, Research) on Tuesday. The market also focused on a rescue plan for U.S. mortgage giants Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research).