SWF Radar USTreasury

Bloomberg reports that, “Asian central banks may fail to halt a rally in the dollar by selling the U.S. currency, as Treasury Secretary Henry Paulson raises the prospect he will order intervention, Morgan Stanley said.”

Thomson Reuters reports that, “Sovereign wealth fund China Investment Corp (CIC) has urged the U.S. Treasury Department to further clarify how foreign investments in the United States will be reviewed for national security risks.”

Bloomberg reports that, “Federal Reserve Chairman Ben S. Bernanke threw the weight of the central bank behind Treasury Secretary Henry Paulson’s efforts to strengthen the dollar after its 10 percent drop over the past year.”

National Journal writes that, “Speaking in Pittsburgh today [Tuesday] at an event on global trade, Undersecretary David McCormick spoke to the security anxieties many U.S. citizens feel toward foreign investments. His remarks came just one day after Treasury Secretary Henry Paulson used a speaking engagement before the U.S.-United Arab Emirates Business Council in Abu Dhabi to address concerns abroad over just how welcome the U.S. has become to foreign investment.”

Emirates Business 24/7 writes that, “Paulson’s view will be a lot harder to sell to the American heartlands than to an audience in Doha or Abu Dhabi.”

Henry Paulson writes in Abu Dhabi’s The National newspaper that, “As the US urges other nations to open their economies, many in the Middle East ask if we genuinely welcome foreign investment now. Some worry about a general, growing protectionist sentiment in America. They may also worry that US sentiment toward Middle East investment was permanently affected by the Dubai Ports World case. My response is the same as that expressed by President Bush during his Middle East visit two weeks ago - as America seeks to open new markets abroad, we will keep our markets open to investment from private firms and sovereign wealth funds. We reject measures that would isolate us from the world economy.”

Thomson Reuters reports that, “Qatar is free to drop its peg to the US dollar, US Treasury Secretary Henry Paulson said yesterday [Sunday], as the Gulf oil producer battles with near record inflation.”

Thomson Financial reports that, “US Treasury Secretary Henry Paulson, on a tour of Persian Gulf countries, again endorsed investments by their government-owned sovereign wealth funds (SWFs) into the US, saying they are motivated by profit and not by politics.”

AFP reports that, “US Treasury Secretary Henry Paulson said on Saturday that the link of Gulf currencies to the dollar is a sovereign matter, as he started a Gulf tour in the Red Sea city of Jeddah.”

The article adds that SPA reported him as saying at a press conference with his Saudi counterpart, Ibrahim al-Assaf (Minister of Finance and National Economy of the Kingdom of Saudi Arabia), that, “The (future of the) link between these currencies and the dollar rests in the hands of these governments.”

Brad Setser writes in response to this article, “So much for the notion that the Treasury is open to a change in the Gulf's peg.”