China has about 70% of their reserves in dollars. According to Reuters, during the meeting of the G8, the Chinese State counselor Dai Bingguo, appealed to the world diversify the booking system and aim at relatively stable exchange rates, in what represents a clear attack on the American currency. The entire attentive context against the dollar. Will you continue debilitadose in the medium to long term? Obama had committed to support its value. The strength of the currency is part of the economic strategy of the U.S. Government. The question goes through know how much effort will be willing to make Obama to achieve this objective and how much can withstand the temptation that can generate a dollar weak, beneficial to the competitiveness of the American economy. Investors are already making their bets against the dollar.
Axel Merk, Manager of the Merk Hard Currency (MERKX) and Asian Currency (MEAFX) Funds funds, recognized in The Wall Street Journal that you are taking against the dollar long positions because he sees a future weakening of the U.S. currency. The first of these funds is made up by 24% of liquidity in euro, 17% in Norwegian kroner (encouraged by the revenue that the country earns from its oil exports), around 35 per cent in commodities related to the currencies of Australia, New Zealand Canada, and 14% in gold. Another big bet that exists on the market is by the inevitable appreciation you will have the yuan as soon as the Chinese Government give in to pressures, mainly from the United States for the currency is strengthening against the dollar. This bet by the yuan exchange rate hedges via which is made through bets with large banks in the direction in which the yuan behaves. The world knows that in the short term not you can release him hand to the dollar for two reasons. The first is the great commitment of the investments of international reserves of the countries into dollar-denominated assets.
The second reason is that the dollar is serving barrage before the increase in uncertainty in the markets. If the dollar, which is one of the few reliable shelters for the investor, falls, then the crisis can reach immeasurable dimensions. In the medium and long term, however, the dollar already lost its global leadership which translates into a lower global demand for assets denominated in that currency, which will weaken it against the impossibility of us hold it. Original author and source of the article.