Dollar Sucks Harder than Euro, Breaks Records, and Gets Ditched by the Russians

Wednesday, May 20, 2009 , , , 0 Comments

"Death of the Dollar" - Sharon Hodgson

Simple rules of money creation at work here, kids. You print too much of it, you risk debasing it. What is so complicated about this?

The dollar has now hit its lowest level since January. Deflation? How about pooflation?

Via Bloomberg:

May 20 (Bloomberg) -- The dollar dropped to the lowest level versus the euro since January as falling currency and stock volatility and signs of thawed credit markets spurred speculation investors will seek higher-yielding assets.

The U.S. currency’s decline accelerated after weakening beyond the level where it traded in March after the Federal Reserve announced its plan to buy up to $300 billion in Treasuries. New Zealand’s and Canada’s dollars gained versus the greenback as crude oil prices rose above $60 a barrel, encouraging demand for currencies of commodity producers.

“The dollar is the anti-risk currency,” said Warren Hyland, a money manager in London at Schroder Investment Management Ltd., which helps oversee $204 billion in assets. “Now we are transitioning into risk-taking environment, and you have this structural change of capital flows, which is moving into emerging markets.”

Russia has already forsaken the dollar for the euro (ha, good luck with that one):

The US dollar is not Russia’s basic reserve currency anymore. The euro-based share of reserve assets of Russia’s Central Bank increased to the level of 47.5 percent as of January 1, 2009 and exceeded the investments in dollar assets, which made up 41.5 percent, The Vedomosti newspaper wrote.

The dollar has thus lost the status of the basic reserve currency for the Russian Central Bank, the annual report, which the bank provided to the State Duma, said.

In accordance with the report, about 47.5 percent of the currency assets of the Russian Central Bank were based on the euro, whereas the dollar-based assets made up 41.5 percent as of the beginning of the current year. The situation was totally different at the beginning of the previous year: 47 percent of investments were made in US dollars, while the euro investments were evaluated at 42 percent.

The dollar share had increased to 49 percent and remained so as of October 1. The euro share made up 40 percent. The rest of investments were based on the British pound, the Japanese yen and the Swiss frank.

Do you see the problem here, kids? I hope so. If not, I'm not trying hard enough...

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.