Dollar! Still THE KING?

The wheel is turning into effect; the dollar now finds itself at the epicenter of the world’s problems. In fact , having anticipated the decline of the euro, markets and investor psychology have changed rapidly in recent weeks selling off the dollar under the pretext that the American economy would sink back into the doldrums … Very bad U.S. economic data combined with the overall public debt of this country brushing 100% of GDP and a budget deficit exceeding 10 % of its GDP fueled this obsession with “double – dip.

It must be said that the last minutes published by the Federal Reserve , which indicated a probable sinking into deflation in an environment where interest rates would remain at current zero for an indefinite period has not really helped to dispel these fears. Thus , despite an amount of about 1,750 billion dollars into the system , the Fed seems crushed by the grim performance of its economy and is poised to repeat injections of cortisone -drops – quantitative rate – of – while recognizing that the activity could not regain its old levels until 2016 !

It is in this context that the greenback appears to waver from its pedestal where he previously reigned virtually unchallenged in the extremely closed global reserve currency , this role is somewhat eroded over the past decade by the small ‘ Euro. Indeed , central banks and other large global institutions – disturbed by his excessive volatility in recent years – are already preparing an alternative to the successor Dollar (nevertheless still held at 64% in foreign reserves ) would in any If not the euro … Indeed , the specialized agencies of the United Nations such as China or other nations who have not the West increasingly in the global carefully eyeing towards the Special Drawing Rights IMF

The international reserve currency created in 1969 without a currency (in the sense that it can serve as a means of payment daily to the consumer) and based on a basket of currencies like the dollar , the Euro, the Yen or the Pound Sterling is clearly not as volatile a single currency – whatever – considered in isolation. Therefore, thanks to the financial crisis has revived the day the imperative of diversification – at least for central banks to stabilize their balance sheets anxious – it is now time to gradually reduce their reserve currency – the dollar – which, while it appreciated for balance in recent months has still lost a quarter of its value (relative to the euro ) for the last eight years! This scenario is particularly challenging for Asian Central Banks that hold significant proportions of greenbacks from their reserves in a context where the return on U.S. bond paper is also quite negligible.