VOLCKER DEPARTURE REVIVES DLR, INFLATION FEARS
Paul Volcker's decision not to go for a
third term as Federal Reserve Chairman and the nomination of
Alan Greenspan to replace him have revived deep concerns about
the U.S.' ability to prevent a further dollar decline and stem
rising inflation, financial market analysts said.
    Although Greenspan is known as a committed anti-inflation
fighter in the Volcker mould, doubts are already surfacing in
the U.S. financial markets as to whether he has enough
political clout and monetary experience to wage a tough
campaign against inflation over the next year or two.
    "The critical issue is how (Greenspan) will deal with
inflation," said Stephen Axilrod, Vice Chairman of Nikko
Securities Co International Inc and former staff director for
monetary and financial policy at the Fed.
    "A lot of questions have been raised by Volcker's
departure. Until Greenspan answers them, the markets will
remain nervous," added Stephen Slifer, money market economist
at Shearson Lehman Government Securities Inc.
    This morning's announcement sent the dollar into a
tailspin, which was halted only by concerted central bank
intervention in the open currency market.

 Reuter
