Dollar losing its luster but still reigns globally - Economic times ( Nov 5,2009)
Instead of stashing dollars under their mattresses, many Brazilians now set aside money to buy euros or invest their savings locally.
The dollar has dropped about 16 per cent against a basket of currencies since early March, dragged down by worries about the ballooning US deficit.
In Russia, where the dollar was the benchmark after the collapse of the Soviet Union in the 1990s, residents are increasingly turning to the euro.
Polls show that the euro has overtaken the dollar as the preferred foreign currency for savings in Russia
Is buying of gold by India a move to diversify its forex holding or diluting Dollar holdings ?
China should drop Yuan's dollar peg: Merrill Lynch ; Economic Times (Nov 4,2009)
Does this all suggest that Dollar is in its end days and there is a need for new currency ??
, there is more or less consensus among the economists of the world that china is on a well directed path of placing its currency as the substitute for foreign reserves. Currency swap agreements with Argentina, Hong Kong , Indonesia , Malaysia , South Korea and others are testimony to the future ambitions of china. These arrangements removed any need for these trading partners to use the dollar as an intermediary currency in dealing with China. Brazil, is the most recent and significant addition to this list, as it is one pillar of the emerging economies. Now the question is not if but when China will take the bold step forward. The major test would the shift in the political orientation of china, about loosening the grip on the Chinese market and currency. Experts are giving the timeline upto 2020 for having china as a serious foreign reserve currency. The time will shape the new world order.
ReplyDeleteMove over China, I would root for Euro as the new reserve currency. Euro is efficiently managed by a group of European countries comprising behemoths like Germany and France. China, bettering on the account of manufacturing capabilities is still on a geographical disadvantage of incompetent neighbours. Trade may flourish, but it doesn't advocate a seriousness of declaring it as a new reserve currency. I suspect whether China would be able to assert its case in the West. The ambiguous policies for which China is notorious worldwide, dents its chances.
ReplyDeleteLets not believe that the economic crisis is here to stay. Soon, we shall see the dollar recuperating (read positive GDP growth in US).
Sure it's good to be optimistic about the fall of the dollar... but I think the ground reality is that most nations (read developing nations) still depend on the Dollar, and not the Euro or the Yen or the Yuan.
ReplyDeleteWhat economists are saying is that this is a recession for America, and hence, the move to hide behind other currencies. USA still trades more than any other nation (barring the EU), and has the obvious first mover advantage.
India's move to buy more gold is obviously a hedge against the falling dollar, and also to buy some insurance against its precariously managed BOP position.
So, let's not jump to conclusions... continue to stock dollars because, as Warren Buffet says, "When everyone is fearful, become greedy, and when everyone is greedy, become fearful".
Given that as most of the crude-oil pricing is still done in dollars, as well as the recent rally in the DJIA, S&P 500, etc. are encouraging signals that the dollar is here to stay!!!!
ReplyDeletechk this out..
ReplyDeletehttp://www.economist.com/daily/news/displaystory.cfm?story_id=14842922
Gives us a balanced view of y the dollar will still hang on... and what our alternatives are...