Alan Greenspan Says Dollar’s Decline Is Linked To Growing US Debt

This article from Bloomberg was written by Kevin Carmichael and Simon Kennedy

Oct. 21 — Former Federal Reserve Chairman Alan Greenspan said the dollar’s depreciation may reflect growing unwillingness among foreigners to buy U.S. debt.

“Obviously there is a limit to the extent that obligations to foreigners can reach,” Greenspan said in a speech in Washington today. The dollar’s decline to its lowest since 1997 may be “an indication America is approaching this limit.”

Greenspan’s warning came after the U.S. Treasury reported last week that international investors sold a record amount of U.S. financial assets in August. Total holdings of equities, notes and bonds fell a net $69.3 billion after an increase of $19.2 billion in July.

The dollar has declined about 8 percent against the euro this year and 4 percent against the yen.

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