The Bank of Russia said in a statement it had begun targeting a dual currency basket — made up of 90 U.S. cents and 10 euro cents — as of Feb. 1 and would gradually raise the weighting of euros.
“Increases of the weighting of the euro in the twin currency basket, to a level appropriate for the task of exchange rate policy, will take place step-by-step as market players adapt,” the statement said.
The greenback’s weakness on global currency markets, as well as Russia’s oil-driven current account surplus, have led central bankers to say they were looking more at the euro as a guide to day-to-day exchange rate targeting.
Dealers said the statement triggered dollar selling on the local currency market. One said the policy shift would help stop the ruble being buffeted by sharp euro-dollar moves, although other dealers remained at a loss over the practical impact.
Here in Malaysia, for example, Prime Minister Abdullah Ahmad Badawi recently said he is seeking ways to reduce the economy's reliance on the dollar for trade. Indonesia has mentioned it is considering trimming its holdings of U.S. Treasuries. The same goes for Thailand, according to the Financial Times.
China also has been in the news as traders speculate that Asia's No. 2 economy may pull the plug on dollar-denominated debt. Such a move by the second-biggest holder of U.S. Treasuries after Japan could send shockwaves through global markets.
with bush aimed to either meet or beat last year's deficit, i think it's clear what the future holds...