Gates bets on US dollar fall

DAVOS - Bill Gates, whose net worth of US$46.6 billion ($65 billion) makes him the world's richest person, is betting against the US dollar.

"I'm short the dollar," Gates, chairman of Microsoft said in an interview at the World Economic Forum in Davos, Switzerland. "The ol' dollar, it's gonna go down."

Gates' concern that widening US Budget and trade deficits are undermining the dollar was echoed in Davos by policymakers including European Central Bank president Jean-Claude Trichet and German Chancellor Gerhard Schroeder.

The dollar fell 21 per cent against a basket of six major currencies from the start of 2002 to the end of last year.

The trade deficit swelled to a record US$609.3 billion last year and total US Government debt rose 8.7 per cent to US$7.62 trillion in the past 12 months.

"It is a bit scary," Gates said. "We're in uncharted territory when the world's reserve currency has so much outstanding debt."

US President George W. Bush is pledging to clamp down on spending to halve the Budget deficit - US$427 billion in the 12 months to September 30 - during his second term.

The Administration releases its fiscal 2006 Budget on February 7.

Gates reflected the views of his friend Warren Buffett, the billionaire investor who has bet against the dollar since 2002.

Buffett said last week that the US trade gap will probably further weaken the currency.

"Unless we have a major change in trade policies, I don't see how the dollar avoids going down," he said.

 

Gates described China as a potential "change agent" for the next two decades. His foundation received approval in September from China's foreign-currency regulator to invest US$100 million in yuan shares and bonds.

- BLOOMBERG