They may try to diversify, but the global currency will drag them back
JAMES M. CAIN’S novel “The Postman Always Rings Twice” portrays a violent love affair between Frank Chambers, a drifter, and Cora Papadakis, a former beauty queen now married to a man she despises. Their romance is doomed from the beginning. Every attempt to find happiness fails. Any attempt at being apart is equally hopeless. “Why did you have to come back?” she hisses after one break-up. “I had to, that’s all,” he replies.
The dollar is the closest thing to a world currency. Commodities that are traded globally are quoted in dollars. So are other currencies. A lot of cross-border trade is invoiced and settled in dollars, too. Dollars are the unit by which the world of finance keeps score. So there is logic to countries keeping stores of them in reserve. It is generally dollars that you need in an emergency.
There are other reasons for breaking free of the greenback. Its global role gives America the means to impose financial sanctions to great effect. Its use of such powers has steadily grown. In response, Russia has slashed the share of dollars in its currency reserves. It is not hard to imagine that some other countries have weighed the odds of at some stage being caught in a dispute with America.
Reserve managers appear to be counter-cyclical investors, selling when others are buying. This is rather cheering. The dollar looks overvalued on many benchmarks. And if anyone can take a long-term view, it ought to be reserve managers. Even so, Mr Englander suspects that some of them are waiting for signs of dollar weakness before selling.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
McConnell declines to publicly endorse Herman Cain for Federal Reserve BoardThe Senate majority leader’s noncommittal stance suggests he is not in favor of Trump’s choice.
Read more »
China to step up bank reserve ratio cuts to help small firms: state mediaChina will step up its policy of targeted cuts to banks' required reserve r...
Read more »
Cain, Moore nominations for Federal Reserve seats on track: KudlowTop White House officials on Sunday defended President Donald Trump's plan ...
Read more »
China to step up bank reserve ratio cuts to help small firmsChina will step up its policy of targeted cuts to banks' required reserve r...
Read more »
Watch: John Oliver takes down Trump's Federal Reserve picks Cain, Moore—'Dangerously goofy goofs'Trump wants to install “people that will do exactly what he tells them to do,” Oliver said.
Read more »
Ecuador reserves the right to investigate Assange: foreign ministerEcuador reserves the right to conduct an investigation of Wikileaks founder Juli...
Read more »
Trump Selects Herman Cain for Federal Reserve Board, Sources SayTrump plans to announce his selection very soon, said three people, who asked not be identified discussing the nomination because it hasn’t been announced. In Cain and Moore, Trump would place two political loyalists on the board of a central bank that has frequently crossed him.
Read more »
Why politicizing the Federal Reserve could have dangerous consequencesThe Federal Reserve's unrivaled influence on the world's economy is due in no small part to the belief that it simply doesn't care about politics.
Read more »
Trump considering Herman Cain for Federal Reserve BoardNEW: President Trump is considering naming Herman Cain, a former pizza company executive and 2012 Republican presidential candidate, to the Federal Reserve Board, according to two sources familiar with the matter.
Read more »