The odds of a recession in the United States is between a third and half due to the credit crisis sparked by problems in the U.S. subprime mortgage sector, former Federal Reserve chief Alan Greenspan said on Wednesday.
"I think the odds of a recession in the U.S. is somewhere between a third and a half," Greenspan said at a conference in Lisbon. "The most likely scenario is a slowing down of economic growth in the U.S."
Greenspan said the crisis was beginning to dissipate in spite of large losses reported by leading banks this week.
"We are beginning to see the frenzy calm down," he said. "Unless we get secondary effects, the worst is over."
Asked about the foreign exchange markets Greenspan said it was extremely difficult to predict what will happen to the dollar and euro in the next 18 months, adding that the dollar's decline was driven by interest rate differentials.
"We have very little capability to project exchange rates over the next 18 months," he said.
He cautioned against central banks intervening in the foreign exchange markets, saying the foreign exchange market is too large.
"It's very large and I am not sure that a central bank or a group of central banks have the resources," he said, when asked about the possibility of intervening to change foreign exchange rates.
The rise of the euro, he said, had created two world currencies that were international stores of value -- the dollar and the euro.
"There is no fear that one will fade," he said, adding that there is room for more than one major currency.
(Additional reporting by Ruben Bicho and Sergio Goncalves)