The days of dollar dominance are far from over. True, the currency has come down from its previous highs but that correction was long overdue given the lackluster performance of Wall Street as well as the fiscal policies of various nations across the world. In a unipolar world, where US is the sole superpower it is hardly surprising that dollar was the currency of the world. The US economy's robust growth during the decade of 1990s and the tremendous confidence investors across the world placed in the US economy helped the dollar raise by 50% between July 1995 and February 2002.

However, the socio-economic scenario today is very different. The burst of the Internet bubble and ensuing recession in the US economy initially brought down the value of the dollar against the euro. The war against Iraq as well as oil-related tensions have forced its downfall further. There seems to be a herd instinct acting in the market to drive the dollar downward. The present geopolitical problems, the line of corporate scandals surfacing in US have eroded the confidence of foreign investors. The economic fundamentals of the US economy add another dimension to the problems of the dollar. The ballooning trade deficit of the US is a major cause of concern. John Snow's announcement that he would reconsider the `strong dollar' policy initiated by the Bush government further stumbled the already battering dollar. All these factors have made the US dollar look `unattractive' to foreign investors.

The drop in dollar could have severe implications for many countries across the world specially the export dependant economies of Asia. How significant is this fall in dollar against other currencies such as the euro? How sustainable is the rise from other currencies? What does it indicate about the global economic scenario? Is it a precursor to changing equations of economic dominance or just a necessary correction with the ranks largely remaining unchanged? Is there anything the US can do to restrict this so-called downfall or should it do anything in the first place are the questions arising in the minds of many.

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