The greenback is stronger than many think..
Stories about it’s demise are quite exaggerated. In fact, according to the managing director of the IMF, it’s surprising how strong it has remained, considering what happened..
IMF Chief: Dollar In No Serious Risk
Monday, November 16, 2009 10:41 AM
By: Dan Weil
The dollar’s demise has been exaggerated, says Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF).
He told CNBC the greenback will remain the world’s primary reserve currency for years.
“What I’m surprised (about) is that the dollar has been very resilient during this crisis,” Strauss-Kahn says.
Many economists expected the currency to collapse because the financial crisis originated in the United States.
“It didn’t happen, because most of the people around the world. . . still believe that the best way to keep their money safe is to put it in the dollar,” Strauss-Kahn explained.
“For a rather long time we’ll have the dollar as the main currency in the global economy. What may happen after 20 or 30 years, I don’t know. But just ahead of us, I don’t see the role of the dollar decreasing.”
The IMF chief said that while the financial crisis isn’t over yet, global economies are rebounding.
“You have to keep in mind that there is always a long delay between growth resuming on one hand and a peak in unemployment on the other hand.”
So in most economies, unemployment will continue to rise for about a year, even as growth resumes, Strauss-Kahn said.
Not everyone is so confident about the dollar.
Asian central banks are worried enough about its decline against their currencies to buy greenbacks in the open market.
“It’s costing us,” Korn Chatikavanij, Thailand’s finance minister, told Dow Jones.
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And it might very well surprisingly rebound when the Chinese let their currency go up.