It was a one-two punch from the two most powerful financial players in
Their messages were designed to stem what has been a tumultuous fall for the most widely traded currency in the world, the U.S. dollar.
In an usual move, U.S. Federal Reserve Board Chairman Ben Bernanke came out declaring the weakness in the dollar “contributed to the unwelcome rise in import prices and consumer price inflation. ” The central bank is “attentive to the implications,” he added.
The interpretation by global traders is "
Bernanke’s comments followed a high profile visit to the Middle East this week by U.S. Treasury Secretary Henry Paulson, the former Chairman and CEO of Goldman Sachs.
In his only international interview on this trip, Paulson told CNN's Marketplace Middle East, "The economic fundamentals in our economy are longer term quite strong. And what I've said is I believe that those fundamentals are going to be reflected in the value of our currency.”
The think tank for the industrialized world, the OECD, does not share that optimism. In its annual economic forecast, the
While Paulson did not want to be drawn into that specific report, he did take issue with its projections.
“I expect growth to be to be greater at year end. And I certainly would expect it to be greater in 2009 than in 2008. So I wouldn't be signing on to that forecast,” he told CNN.
This is welcomed news in the
So far, the
The latest vote of confidence came from Sheikh Mohammed bin Rashid Al-Maktoum, the Prime Minister of the
The last bit of that quote is what I find the most interesting. It would not be in the best interest of the U.A.E. or
Facetime in the Middle East
For an administration which did not spend a great deal of time in the region in the last seven years, they seem to be making up for lost time in 2008. U.S. President George W. Bush has visited the region twice, Vice President Richard Cheney once, followed by Secretary Paulson and Deputy Treasury Secretary Robert Kimmit.
After a rush to sign legislation around the Committee on Foreign Investment last autumn after the Dubai Ports World debate and subsequent investments into Citigroup and Merrill Lynch, the Treasury department wants to make clear that the
Asked whether this rush to legislate was in hindsight a mistake, Paulson responded, “Oh, I think exactly the opposite. The process which I chair clarified the rules, made it very clear that the only thing we were focused on was national security. And I think this makes the process easier and clearer and sovereign wealth funds are very much welcomed.”
As a former key player on Wall Street, Paulson knows the advantage of having funds invested in the
It will take time to rebuild trust in the U.S. dollar and time to know whether money from the Gulf is truly welcomed or raises more questions from Capitol Hill.
ABOUT THIS BLOGJohn Defterios’ blog accompanies the weekly business program, Marketplace Middle East (MME) that is dedicated to the latest financial news from the Middle East. As MME anchor, John Defterios talks to the people in the know, finding out their opinions on the big business moves in the region, he provides his views via this weekly blog. We hope you will join the discussion around the issues raised.
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