European Central Bank President Jean-Claude Trichet said he's "concerned" about the euro's appreciation - - his most direct comments since the euro's rise to record levels above $1.50 versus the dollar, Bloomberg News reported Monday.

The euro rose about one-half cent to $1.5407 versus the dollar before retreating to $1.5351 in Monday afternoon trading.

``We're concerned about excessive exchange-rate moves in the present circumstances,'' Trichet told Bloomberg News in Basel, Switzerland Monday. It's the first time Trichet has specifically expressed worry about the currency since November 2007, when he said he opposed "brutal" moves.

Amid a U.S. economic slowdown and U.S. Federal Reserve efforts to stimulate the world's largest economy with interest rate cuts, the ECB has maintained a status-quo monetary policy, keeping its benchmark refinance rate a 4%. That sand-pat policy has contributed to a flight out of the dollar and into the euro, which increases the cost of euro-zone exports to the U.S., if European companies raise prices to compensate for the dollar's depreciation. The euro has risen more than 5% versus the dollar this year, and is up more than 90% since 2001.

Forex Analysis: Trichet's comments came as a surprise. A hawk, Trichet has heretofore underscored the need for monetary policy discipline to contain euro-zone inflation. Further, Trichet has sided with the monetarists' school that argues that foreign exchange rate changes should be market-determined, so long as they are gradual. In addition, the ECB has never intervened in the currency markets to weaken the euro, and last intervened to strengthen it in 2000. No change is expected in that policy given Monday's comments, barring a sudden, large fall in the dollar / rise in the euro.

The dollar plunged to a two-year low versus Japan's yen Tuesday, and retreated against other major currencies, on fears the U.S. economy has fallen into a recession, Bloomberg News reported.

The dollar fell 1.26 yen to 106.90 versus the yen. Meanwhile, the British pound rose about 1.5 cents to $1.9704 in mid-day Tuesday trading. The dollar was virtually unchanged versus the euro at $1.4862.

Economists and analysts say a recession in the United States would invariably drive the dollar lower, due to foreign investors' reduced demand for dollar-denominated U.S assets, many of which would underperform during a recession. The dollar also would be hurt by lower interest rates, a near-certainty in the months ahead, with the U.S. Federal Reserve widely expected to again cut benchmark, short-term interest rates to jump start the U.S. economy.

China, which has kept its currency, the yuan, artificially low in order to keep the cost of its exports low and promote a domestic economic boom as its nation develops, is finding that the strategy has a negative effect: domestic inflation.

Unlike market-based currencies characteristic of the foreign exchange, China's government sets the yuan's value -- allowing it to trade in a tight band, currently at about or near 7.2730 yuan to the U.S. dollar. China argues that the yuan/dollar peg is necessary to promote economic growth and protect young, developing businesses and sectors.

And the strategy is working: China has registered +10% GDP growth for more than four years; has the world's third-largest economy, in purchasing power parity terms, behind the European Union and the United States; and has generated massive trade surpluses, particularly against the U.S.

Still, the U.S. counters that the peg keeps China's goods at artificially low prices and hence gives China's companies an artificial competitive advantage in trade. China has turned aside those and other U.S. concerns, particularly the trade deficit, arguing that if the U.S. wishes to lower its trade deficit, its citizens should save more and consume less, and the U.S. government should eliminate its budget deficit.

The dollar's share of global foreign currency reserves dropped to a record low in the third quarter (Q3), Bloomberg News reported Friday, citing International Monetary Fund data.

The dollar comprised 63.8% of reserves at the end of September 2007, down from 65% at the end of June 2007, the IMF said. Meanwhile, the euro's slice of the reserve pie increased during the same period to 26.4% from 25.5%. The British pound's portion rose to 4.7% from 4.6%.

Dollar doldrums

Analyst C. Leonard Bauer, formerly of Prudential, said a constellation of factors is prompting governments to reduce dollar-based foreign exchange reserves, chief of which is the dollar's decline versus the euro, pound, and other major currencies.

Believe it or not, but "cheers erupted on the foreign exchange desk at Scotia Capital" yesterday when the loonie (that's what us Canadians call our dollar) first traded at parity with the U.S. dollar -- for the first time in 31 years. I'm sure the scene was similar in other banks across Canada. As is almost usual, though, the Americans beat us to it as they are the ones who actually did the trade, specifically Citigroup's New York currency desk. Oh, well.

The Canadian dollar hit its historic low of 61.79 cents (U.S.) on Jan. 21, 2002, but has gained more than 16% this year and almost 8% since mid-August alone. The True North is indeed strong. But is this good for Canada? For the U.S.? Canadian exporters are no doubt suffering, American ones will be doing better following the fall of the U.S. dollar. Tourism will likely improve in the U.S., but suffer in Canada. And consumers? Canadian consumers aren't happy, but I'm sure U.S. outlet malls along the Canadian border are quite happy. It used to be the other way around.

Many people like to dream up ways to get rich quick. Many people dream about inventing great things that could make them wealthy in a hurry. I often think about money also, but just in case you haven't figured it out yet, please be warned that I have some unconventional ways of thinking.

The money question I wish to place before you today is a concept which I have never gotten a decent answer to. When I pose this question I get blank looks, shrugged shoulders, an occasional sneer, and most often a good hearty "who cares!" Be that as it may, I place my query here for you today in the hope that I might get at least one good answer. Here's the question:

What would be the immediate and long-term economic effects if the United States, Canada, and Mexico were to equalize their currencies and maintain a neutral currency exchange rate?

There, now that's not such a stupid question is it? I'm sure that the question has already been fully addressed in other forums and I would very much welcome any links that readers could provide to appropriate discussions of this concept. I welcome any and all answers. Thanks in advance for your time.