reserve currency posts
FeedPosted Nov 5th 2009 4:30PM by Connie Madon (RSS feed)
Filed under: India, China, Brazil, Russia, Market matters, Money and Finance Today, Federal Reserve
The US dollar is down 20% since 2002 on a trade weighted basis. Other world economies like China are dynamic, with growth rates of 8 and 9%. With that kind of clout, countries like China, India and Brazil, can choose where to place their reserves.
Slowly, developing countries are shifting their reserves away from the dollar into the euro and yen. Neil Mellor, strategist at Bank of New York Mellon Corp (NYSE: BK), which has some $20 trillion dollars in assets under custody said: "I don't think there will be an imminent move, but it is quite clear there's a plan to shift reserves to a more balanced portfolio."
Barclays Capital Research reported that central banks placed 63% of new cash in non US currencies between April and July.
Continue reading Central Banks lead a shift away from the dollar
Posted Jun 20th 2009 12:10PM by Joseph Lazzaro (RSS feed)
Filed under: International markets, Forecasts, Other issues, India, China, Brazil, Russia
The BRIC nations -- Brazil, Russia, India, China -- basically the powerhouses of the developing world, recently met to discuss, among other things, the possibility of forming an effort to move away from the dollar as the world's reserve currency.
Among options for consideration: a) a shift to another hard currency, b) a shift to a basket of currencies, and c) the possibility of the International Monetary Fund's special drawing rights unit of account serving as the new reserve currency.
Continue reading No BRIChouse yet: Dollar to remain world's reserve currency
Posted Oct 20th 2008 5:15PM by Joseph Lazzaro (RSS feed)
Filed under: International markets, Forecasts, Financial Crisis
Is the dollar's status as the world's reserve currency coming to an end?
It could be, if present trends driven by corrective measures taken to stem the global financial crisis continue, in the view of one monetary official.
European Central Bank council member Ewald Nowotny believes a 'tri-polar' global reserve currency system is developing among Asia, Europe and the United States.
"What I see is a system where we have more centers of gravity," Nowotny said Monday in an interview with Austrian state broadcaster ORF-TV,
Bloomberg News reported Monday. "I see for the future a tri-polar development, and I don't think that there will be fixed exchange rates between these poles."
The dollar has served as the
world's reserve currency for more than 30 years. A reserve currency is one which financial institutions -- and nations, for that matter -- seek to own during times of financial crisis, stress, or uncertainty. The reserve currency attracts investors in a phenomenon called a 'flight to safety.'
The
euro, the currency of the
euro zone, this decade has challenged the dollar's reserve currency status, following its introduction into global financial markets in 1999. (Physical euro banknotes and coins began to circulate on January 1, 2002.) A series of U.S. fiscal policy and trade policy errors, among other factors, has caused the dollar to weaken against the euro from about 82 cents per euro in 2001 to the present
$1.3317 per euro.
Continue reading Investors still buy dollars despite problems
Posted Oct 10th 2008 4:50PM by Joseph Lazzaro (RSS feed)
Filed under: International markets, Forecasts, Recession, Financial Crisis
Twenty five trillion dollars in global market capitalization wiped out. At least $500 billion -- and most likely in excess of $1 trillion added to the United States' national debt.
The Fed has loaned money to corporations, added massive liquidity to banks, cut interest, and the
U.S. Treasury may invest directly in private banks, if it doesn't nationalize them.
And the currency of the nation primarily responsible for the global financial crisis -- the dollar -- how has it fared?
The
dollar has been firm, for the most part, even rising against the
euro and
British pound. However, the dollar has fallen against
Japan's yen. As of Friday at 2:35 p.m. EDT, the dollar had risen 2 cents versus the euro to $1.3382 and 1.5 cents versus the pound to $1.6947, but had fallen one-half yen to 99.33.
Continue reading Despite stock rout and more U.S. debt, dollar is firm (so far), except vs yen
Posted Sep 17th 2008 1:30PM by Joseph Lazzaro (RSS feed)
Filed under: International markets, Forecasts, Federal Reserve, Recession
What will be impact of the
Fed's takeover of AIG on the dollar?
Check back in a few days or even a week, according to currency traders.
"There are too many unknown variables to say with any authority right now where the dollar will head from here," currency Trader Andrew Resnick said Wendesday at mid-day. "We'll need at least a few days, maybe a week or so to sort out who the winners are and who the losers will be." Resnick added that he is presently flat (obviously), with no open currency trading positions.
At mid-day the dollar was slightly lower, down about 0.5% against the euro, British pound, and yen. But in the broader context of things, "the dollar's move so far has been small, and statistically insignificant and inconclusive," Resnick said.
"Right now, we're just reworking our statistical models. The problem is, the variables keep changing, so it makes the previous projections less accurate," Resnick said.
At mid-day the
dollar was at $1.4136 versus the
euro, $1.7921 versus the
British pound and at 104.63 versus
Japan's yen.
Two scenarios for dollar
Continue reading Currency traders taking wait and see approach after Fed's loan to AIG
Posted Dec 28th 2007 5:04PM by Joseph Lazzaro (RSS feed)
Filed under: International markets, Other issues, Economic data, Federal Reserve
The dollar's share of global foreign currency reserves dropped to a record low in the third quarter (Q3),
Bloomberg News reported Friday, citing International Monetary Fund data.
The dollar comprised 63.8% of reserves at the end of September 2007, down from 65% at the end of June 2007, the IMF said.
Meanwhile, the euro's slice of the reserve pie increased during the same period to 26.4% from 25.5%. The British pound's portion rose to 4.7% from 4.6%.
Dollar doldrums Analyst C. Leonard Bauer, formerly of Prudential, said a constellation of factors is prompting governments to reduce dollar-based foreign exchange reserves, chief of which is the dollar's decline versus the euro, pound, and other major currencies.
Continue reading Dollar's share of currency reserves falls in Q3, IMF says
U.S. Federal Reserve Chairman Ben Bernanke told Congress Thursday he sees a slowing U.S. economy heading into 2008.
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