Daily Ticker Writes: Why the Dollar Will Always Be the Reserve Currency for the World
On Friday morning the U.S. dollar came close to its lowest point of the year against the euro, according to The Wall Street Journal, on expectations that the Fed will have to continue its easy money policies for longer than first forecast thanks to the government shutdown.
“I’ve never been very worried about this,” he asserts. “The reason for that is there really is no alternative. The Chinese are not going to offer – and they cannot, given where they are in development, I think, for a decade or more – a genuine competitor for the dollar.”
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I tend to agree with the premise of this article. As of right now there is no clear alternative to the US Dollar. The Chinese Yuan cannot be that alternative as it is technically not even a freely traded currency. It will be decades before Chinese Yuan approaches the point of even being considered as an alternative to the US Dollar. The Euro? Well, there are too many structural issues in Europe.
There is a real possibility that Euro won’t even survive over the next decade. The majority of European economies (well, almost everyone except Germany) are in a big fiscal mess that is not getting any better. If anything, it is getting a lot worse. With the upcoming worldwide recession over the next few years (I discuss in my previous blogs posts) there is a real possibility that it might force some countries out of the EU and out of the Euro.
That is one of the reasons of why I am so bullish on the US Dollar for the time being. No doubt that the US has some serious economic and structural problems. Yet, that in itself doesn’t determine the value of its currency.
It is quite possible for the currency to appreciate significantly even under dark economic circumstances and that is what I foresee for the US Dollar. Be aware of that.
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Warning: The US Dollar Is About To Surge