There was a lot of hullabaloo over the
declining international value of the dollar in the second week of October.
A number of Asian central banks have intervened in the markets to slow the
appreciation of their currencies against the dollar. Even Jean-Claude,
President of the European Central Bank, tried to prop up the dollar, saying:
"A strong dollar is extremely important in the given circumstances." Yet,
nothing could stall the fall of the dollar against the major currencies of the world.
Reports indicate that the dollar has depreciated by around 13% on
trade-weighted basis since it reached its peak in March this year. Yet, there is
nothing to fear in this fall, for during the peak
of the global financial crisis, the dollar rose up by 12% when panicked
investors rushed to the safe haven in America—investing in dollar-denominated
treasury bills of the US. And today, as the countries are recovering from the
crisis and confidence is slowly returning to the global markets, investors are
switching over to non-US assets. |
