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Dollar's decline may prompt joint intervention, Morgan Stanley says Stanley White The decline of the dollar to record lows might turn into a "more violent correction" that requires the United States, the European Union and Japan to intervene in foreign exchange markets, analysts at Morgan Stanley say. Coordinated intervention could occur after the U.S. Federal Reserve has finished cutting interest rates and the European Central Bank has ceased raising them, according to Morgan Stanley, the investment bank. Japan might act if the dollar approached ¥100, the bank added. But the three major economies are unlikely to intervene as long as the euro stays below $1.50, it said.
(Article continues below) "The dollar could potentially weaken meaningfully further," two Morgan Stanley analysts, Stephen Jen and Charles St-Arnaud, wrote in a note sent to clients late last week. "Though coordinated interventions may not be an immediate threat, they should now be on our radar screen." The dollar index, a measure of the U.S. currency against six others, fell to 76.331 on Friday, the lowest reading since it was created in 1973 and down from 77.03 at the end of the previous week. The euro traded at $1.4505 at the close of trading in New York, up from $1.4393 a week ago. The dollar bought ¥114.853, little changed on the week.
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