Impeachment Is Expected to Pressure Dollar

U.S. assets, especially the dollar, are expected to suffer today following the impeachment of President Clinton but a major sell-off on global markets is not in store, analysts said.

The House of Representatives impeached Clinton on Saturday, setting the stage for the second Senate trial in U.S. history to determine whether a president should be removed from office.

The news will weigh on the dollar but only be a mild negative for stocks and Treasuries, analysts said.

The White House is looking for a compromise to avoid a trial, but political analysts expect Clinton to survive a Senate vote.

A protracted trial would weigh on markets, which fear that U.S. policymakers’ ability to deal with economic trouble spots may be impaired.

“It will create a lot of domestic uncertainty and will take away the attention Clinton can pay to organizing concerted reaction to Brazil or Russia,” said Kirit Shah, chief strategist at Sanwa in London.

Shah said the dollar could sink to as low as 112 Japanese yen in the coming days from its current 116.

Investors in Europe are likely to wait to see the reaction on Wall Street, analysts said.

The news from Congress, combined with Saturday’s announcement of an end to joint U.S.-British attacks on Iraq, will give the markets plenty to digest today. But analysts stressed that reaction will be limited.