The warnings are getting louder. And they're now coming from some of the most intellectual minds in the world of finance and economics. We are talking about the rising claims that the US dollar will soon cease to be the global currency of reserve, a status it got 65 years ago after the formulation of the Bretton Woods agreement.
Now, after China and other BRIC economies raised their voice against the dollar, the chorus of calls for a significant drop in the greenback is coming from sources such as Pimco (the world's biggest bond fund), and Joseph Stiglitz (economics Nobel laureate).
A note from Pimco reads - "We are clearly seeing a loss of status for the US dollar as a store of value even in the absence of a single viable alternative. In combination with other factors, that likely means a continuing devaluing of the US dollars versus other currencies, especially the EM (emerging market) currencies."
The note further adds - "...investors should consider whether it makes sense to take advantage of any periods of US dollar strength to diversify their currency exposure." Well, as we had read about Buffett's grim views on the US economy recently, this legendary investor is already diversifying away from the dollar, and into other currencies.
If the global imbalances (overcapacities in Asia, low savings rate in the US) are not corrected shortly, the ex-US world might have to deal with volatile currency, equity and debt markets. With this new reality, the world is worried about the dollar. But are we prepared for the dollar's fall from grace? I'm not so sure!
Now, after China and other BRIC economies raised their voice against the dollar, the chorus of calls for a significant drop in the greenback is coming from sources such as Pimco (the world's biggest bond fund), and Joseph Stiglitz (economics Nobel laureate).
A note from Pimco reads - "We are clearly seeing a loss of status for the US dollar as a store of value even in the absence of a single viable alternative. In combination with other factors, that likely means a continuing devaluing of the US dollars versus other currencies, especially the EM (emerging market) currencies."
The note further adds - "...investors should consider whether it makes sense to take advantage of any periods of US dollar strength to diversify their currency exposure." Well, as we had read about Buffett's grim views on the US economy recently, this legendary investor is already diversifying away from the dollar, and into other currencies.
If the global imbalances (overcapacities in Asia, low savings rate in the US) are not corrected shortly, the ex-US world might have to deal with volatile currency, equity and debt markets. With this new reality, the world is worried about the dollar. But are we prepared for the dollar's fall from grace? I'm not so sure!
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