By Lucia Mutikani
NEW YORK, June 3 (Reuters) - The dollar surged on Tuesday after Federal Reserve Chairman Ben Bernanke warned the weak U.S. currency posed a risk to inflation, adding to views the central bank could raise interest rates later this year.
Bernanke’s rare warning, made during an address to a conference on monetary policy in Barcelona, Spain, was seen by some market participants as the Fed’s version of a “strong dollar policy,” lending the embattled currency much needed support.
“The fact that these dollar supporting remarks have emerged from an institution with the means to control interest rates is somewhat unprecedented and bears the signs of the central bank’s bid to support the U.S. currency,” said Ashraf Laidi, chief FX strategist at CMC Markets in New York.
The euro <EUR=> dropped to $1.5411, its lowest level in nearly three weeks, surrendering overnight gains that had pushed it as high as $1.5628. In late New York trade, it was quoted around $1.5461, down 0.5 percent on the day.
So let me get this straight, a weak dollar causes inflation? No sir! A weak dollar is the [b]result[/b] of inflation which is caused by continually expanding credit and not allowing for market corrections. Does this guy not understand a simple concept like marginal utility? The more of something there is the less utility (value) it provides -- i.e., we require more of it to satisfy our utility. What would happen to the value of Micky Mantle baseball cards if someone just started printing them off? If the Secretary of the Economy [sic] doesn't even understand simple concepts then we are in serious trouble.