The US dollar has received a lot of bashing in recent times. And why not? The US economy is in the doldrums, unemployment is soaring and the deficit has widened all of which has put immense pressure on its currency. So much so that there have been voices in many quarters questioning the dollar's status as the world's reserve currency. China has been at the forefront suggesting that the US dollar should be replaced with another reserve currency.
However, the MD of International Monetary Fund (IMF), Dominique Strauss-Kahn has said that confidence in the dollar isn't under threat despite the fact that the debt on US' books has bloated.
And his view is endorsed by the Indian Prime Minister Manmohan Singh who also believes in the strength of the dollar. Infact, the PM opines that the current setback in the US is 'temporary' and that there is no substitute to the US dollar for replacement as the global reserve currency. What is more, he expressed confidence that the country would bounce back from the slump that it is in now.
I believe that Strauss-Kahn and Manmohan Singh may be right in suggesting that despite the various ills afflicting the US economy, the dollar is not in a serious threat. The reason for the same is simple. Other developed nations are stuck in a recession as well and their situation is no better than the US that would warrant a change in the reserve currency, in the near future atleast. But I am also of the opinion that the dollar cannot rest on its laurels. Emerging nations such as China are increasingly displaying their might in the global arena. So, while in the medium term, the dollar's position stands secure, if the US does not find a solution to correct its deficit problem, one cannot be sure of the dollar's supremacy some years down the line.
However, the MD of International Monetary Fund (IMF), Dominique Strauss-Kahn has said that confidence in the dollar isn't under threat despite the fact that the debt on US' books has bloated.
And his view is endorsed by the Indian Prime Minister Manmohan Singh who also believes in the strength of the dollar. Infact, the PM opines that the current setback in the US is 'temporary' and that there is no substitute to the US dollar for replacement as the global reserve currency. What is more, he expressed confidence that the country would bounce back from the slump that it is in now.
I believe that Strauss-Kahn and Manmohan Singh may be right in suggesting that despite the various ills afflicting the US economy, the dollar is not in a serious threat. The reason for the same is simple. Other developed nations are stuck in a recession as well and their situation is no better than the US that would warrant a change in the reserve currency, in the near future atleast. But I am also of the opinion that the dollar cannot rest on its laurels. Emerging nations such as China are increasingly displaying their might in the global arena. So, while in the medium term, the dollar's position stands secure, if the US does not find a solution to correct its deficit problem, one cannot be sure of the dollar's supremacy some years down the line.
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