Rogers Says Dollar to Be `Devalued,' Buys Commodities

By Ron Harui and Mike Schneider

Nov. 25 (Bloomberg) -- The U.S. dollar will be ``devalued'' as policy makers seek to weaken it, undermining the greenback's role as an international reserve currency, said Jim Rogers, chairman of Rogers Holdings in Singapore.

``They think that if you drive down the value of your money, it makes you more competitive, now that has never worked in history in the long term,'' said Rogers. The ICE's Dollar Index has gained 19 percent since Rogers said in an interview on April 27 he expected a dollar rally ``about now.''

The dollar advanced against 15 of the 16 most-traded currencies since the end of June, losing out only to the yen, as a global financial crisis drove investors to the perceived safety of Treasuries. U.S. politicians want to reverse those gains to revive growth, Rogers said.

The dollar is ``going to lose its status as the world's reserve currency,'' Rogers said yesterday in a televised interview with Bloomberg News. ``It will be devalued and it will go down a lot. These guys in Washington, they want to debase the currency.''

Rogers said that he is buying the Japanese yen. All of the 16 most-active currencies have weakened against the yen since June, led by a 39 percent drop in the Australian dollar.

The ICE's Dollar Index, which tracks the greenback against the currencies of six major trading partners, traded at 86.147 as of 7:30 a.m. in London from 86.081 late in New York yesterday. It reached 88.463 on Nov. 21, the highest level since April 2006.

Plan to Exit Dollars

Rogers predicts the U.S. currency's rally ``will probably go into next year'' and said he plans to cut the remainder of his dollar holdings during this period.

``If I were doing it today, and what I have done today, is buy the yen,'' Rogers said. ``But, it is also an artificial move that's going on. It's a difficult problem to find out what is a sound currency.''

Democratic lawmakers including Senator Charles Schumer of New York said this weekend they plan to put an economic stimulus package as large as $700 billion before President-elect Barack Obama on his first day in office. Obama has called for a sizeable enough plan to jolt the economy, saying the U.S. faces the loss of ``millions of jobs'' unless immediate steps are taken to stimulate growth and rescue the nation's automakers.

Buying Commodities

Rogers also is buying commodities, saying their ``fundamentals have not been impaired and, in fact, are improved.'' He correctly forecast in April 2006 that the oil price would reach $100 a barrel and gold $1,000 an ounce.

``In mid-October, I started buying commodities, I started buying China and I started buying Taiwan,'' he said. ``I bought them all, but I've been focusing more on agriculture. I mean sugar is 80 percent below its all-time high. It's astonishing how low some of these prices are.''

The Rogers International Commodity Index Total Return has plummeted 52 percent from a record in July, including an 11 percent slide this month. The index has risen 124 percent over the past seven years.

Sugar surged the most in two weeks yesterday amid speculation that higher crude-oil prices will boost demand for alternative fuels, including ethanol made from cane.

Raw-sugar futures for March delivery rose 0.44 cent, or 3.9 percent, to 11.72 cents a pound on ICE Futures U.S. in New York yesterday. The gain was the biggest for a most-active contract since Nov. 4. Sugar has declined in each of the past three weeks.

To contact the reporters on this story: Ron Harui in Singapore at rharui@bloomberg.netMike Schneider in New York at mschneider12@bloomberg.net