Article;
How the almighty dollar has tightened its grip on global finance.
Comment;
Dollar has an exorbitant demand due to its four main
functions- as the currency of the United States (most powerful country), as a
reserve-currency, as international-trade currency and as an investment asset.
Therefore, if there is a crisis in some part of the world the demand for the US
dollar is likely to remain robust in the other regions. For example, when the US and Europe fell in recession, 2008 and after,
the demand for dollars in Asia remained high. Dollar
has a high demand because it is the currency to invest in the US, considered
safest, no risk of default. Every country which has a considerable reserve has
invested in the US.
China has invested a lot in
the US
government securities… The dollar is WORLD’s reserve-currency, every country is
accumulating reserves, even after paying for its imports and there is no upper
limit for it. China
has accumulated trillions of dollars… It
is the currency of international trade; every country needs dollar to pay for
its imports, especially oil (fuel). But, that is changing slowly… recently INDIA and Iran agreed to settle a part of
oil-trade in the rupees… It is also used as an investment asset… People also
use to demand dollars for investment because other currencies may devalue
(depreciate) and dollar may appreciate. They will gain…We can’t imagine how
with so much of the QE the value dollar emerged unscathed… The WORLD absorbed
all the dollars…
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