Is the dollar dying?

Is the dollar dying?

As the US dollar continues falling, analysts argue whether it’s a good sign, or a bad one.

October 13, 2009 1:24 by Aarti Nagraj

US dollar is rapidly declining; according to Reuters, it is currently standing at a 14-month low against other currencies. And as the dollar falls, speculations about it are constantly increasing. Media reports and economists across the world have been widely debating whether the falling dollar is approaching its demise.

A report in Forbes says that global demand for the US dollar is decreasing, and central banks in countries that have cash surpluses are now vigorously stocking up non-dollar assets. “No one wants to be caught holding too many dollars,” Steven Englander, chief US currency strategist at Barclays Capital told the magazine on Monday, “and this rising reluctance is increasing pressure on the US dollar.”

A report in the Wall Street Journal also paints a dismal picture, saying that the dollar will continue declining thanks to a growing appetite for non-US assets and “signs of apparent official resignation.”

“Faith in an economic recovery has reduced the dollar’s safe-haven appeal, while global interest-rate dynamics have fostered its use as a funding currency for riskier investments,” the report said, adding that “lukewarm lip-service” by international authorities will not prevent its decline.

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Tags: assets, dollar, Gulf, markets, oil, US currency