RPT-Greenspan sees no danger in weakening U.S. dollar

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By Marek Petrus

Former Federal Reserve Chairman Alan Greenspan sees no imminent danger in the weakening of the U.S. dollar, a Czech newspaper quoted him as telling a closed-door conference in Prague via a video link.

Greenspan reiterated his view expressed earlier this month that the chances of a U.S. recession due to this year's global credit and liquidity squeeze were about 30 to 50 percent at most, the daily Pravo said in an advance copy of a story due for publication on Thursday.

A Reuters survey of 56 private economists earlier this week found the majority saw the chance of a U.S. recession at somewhere between 21 percent and 30 percent.

The ex-Fed chairman said inflation was a far bigger concern for the United States than the weak dollar, which was trading at a tolerable level, the newspaper reported.

Supporting his point was Wednesday's U.S. data showing the U.S. economy facing some inflation pressure with a 0.3 percent in the consumer price index in September, the biggest gain in four months.

In September, the Fed cut its federal funds rate target by 0.5 percentage points to 4.75 percent to help alleviate liquidity problems and credit concerns resulting from a weak housing market and rising home mortgage defaults.

Greenspan said credit market crises like this year's could never be entirely eliminated and might now become more frequent.

He said U.S. economic troubles had been subsiding but it was impossible to foresee an end.

He added the outlook for the economy hinged on a recovery in the property market, he was quoted as telling the conference organized by the Czech Teleaxis agency.

However, groundbreaking for new U.S. homes and permits for future building both hit a 14-year low last month, data showed on Wednesday, reviving worry about a deepening housing slump and prompting investors to boost bets on another interest-rate cut.

Greenspan was chairman of the Federal Reserve for about 19 years, until early 2006.

[PRAGUE/Reuters/Finance.cz]