Asia tries to support US$

Without any official announcement, some analyst report on friday morning that Asian central banks are trying to stabilized the plummeting dollar by selling them currencies, or (in the same way) massively buying dollars. South Korea, Indonesia, Thailand and Hongkong steps in the hurry on Thurday.

Reading this news on the FT front page on Friday, I wasn’t really surprise. Like every week, it is easy to find out some kind of element describing the current situation of the new financial world. In my opinion, this is clearly another signal that is financial world is strongly changing, shifting to the East.
Still, I was wondering if Asian counties were strong enough to save the US currency? From my point of view, no yet… and particularly not without China. But then, why are they trying? Another key element to analyse would be how was this story reported around the world?

The first question is a quiet easy one for someone how knows something about international economy. First, South-East Asian economy is strong related with the US economy, and some of the South-East Asian countries’ currency is on a fixed exchange rate with the dollar. Secondly, most of these countries export a lot to the United States. If the dollar is weak, the value they will get for the sold goods will be lower. Therefore the balance of payment of the country will be affected by the falling dollar. Other way around, the balance of payment of the United Stated will be boosted by the falling dollar. That is one of the well know explanation for the current situation of the US dollar, and why the US government didn’t do anything to stop the fall.

However such gross information should normally not be distorted, media organisations this week reported the news with quiet similar headlines. Still the way to report the news could, in my opinion, influenced readers incapable of self analysis.

Starting with American point of view, the New York Times didn't report the news at all. I have been searching through the whole web site without finding anything. Knowing that the NY Times is one of the major newspapers in the country, this fact teaches us lot about the American point of view. Going deeper in my research, I could verify my first impression: American press wrote more the last few months about why it is good for American economy to have a weak dollar than about Asian countries gaining power on the international scene.
The Financial Times, standing in my point of view as an objective western press, was the first to report the news on Thursday. We can find a lot of article on the web site talking about the same subject, with approximately the same facts. Headlines were quiet similar: Asia steps in to slow dollar's fall (Kevin Brown in Singapore, October 8 2009), Asia tries to slow decline of dollar (Kevin Brown in Singapore, October 9 2009), Dollar's slide forces Asian central bank action (Chris Flood, October 9 2009). On the one hand, they explain the dynamics, issues and solution quoting some economist and analyst such as Marco Annunziata, chief economist at UniCredit, but on the other hand they cover the news quiet briefly, without going deeply in the detail of the amount of money that were injected by the central banks and what exactly could happen in the future.
In the same way, the French newspaper Le Monde wrote “Pour enrayer la chute du billet vert, les banques centrales d'Asie interviennent” (To stop the falling US currency, Asian central banks step in). This newspaper could be compare with the Times in the way they report the news. As in the FT, Le Monde didn’t get in deeply in the story. They also reported but this time with more detail the dynamics, issues and solution quoting some economist and analyst. In my point of view, Le Monde is an objective newspaper supposes to hit the intellectual range of the population. However, we don’t get a lot of information about pure economical or financial data.
Although, this article covers what we can call the 2 versions of the story: How the dollar hit the Asian countries and in which way the Asian counties are trying to save the US currency or in which way Asian countries become economically stronger. The Financial Times didn’t cover it.
Going back to my local press in Belgium, the Flemish economical newspapers De Tijd wrote :"Aziatische landen snellen dollar te hulp" (Stijn Demeester, Oct 8 2009). It has an interesting introduction quoting the Financial Times : "the several Asian central banks trying to keep the dollar up". I couldn't really learn more about the story, basically because De Tijd used as source the FT, on which I already red about the story. However, it didn’t really surprise me that local press, with a limited budged, used reliable international press to built up some of there articles.
Finally, I had a look on the Bloomberg web site, which provides a lot of different articles that were each specifically dedicated to one fact with specifics economical and financial data. Knowing exactly what I was looking for, it was really interesting to read about specific data. On the other hand, it can be confusing for a not acute person.

To conclude, American press still doesn't want to see the world changing and try to put Asia as the cause of their fall, while the European press is more balanced. The FT didn't really get deep in the story while Le Monde covers both side of the story. So did Bloomberg too. But with more data, percentages and details analyses where a non acute person can get lost.

QPiloy

Sources:

FT :
http://www.ft.com/cms/s/0/1c21d6fc-b469-11de-bec8-00144feab49a.html
http://www.ft.com/cms/s/0/7023f75e-b468-11de-bec8-00144feab49a.html
http://www.ft.com/cms/s/0/a697ef1c-b43a-11de-bec8-00144feab49a.html

Le Monde :
http://www.lemonde.fr/la-crise-financiere/article/2009/10/09/pour-enrayer-la-chute-du-billet-vert-les-banques-centrales-d-asie-interviennent_1251690_1101386.html#ens_id=1216746

De Tijd :
http://www.tijd.be/nieuws/economie-financien/Aziatische_landen_snellen_dollar_te_hulp.8242901-600.art

Bloomberg :
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aCpqAvAofcPU