“Sometimes I’ve believed as many as six impossible things before breakfast,” the White Queen tells Alice in ‘Through The Looking Glass‘. But even she’d struggle to understand what the US dollar has done over the past year.Other countries which went on huge spending binges are now faced with huge debt burdens, crashed property markets and wrecked banking systems. Understandably, their currencies have plunged. Yet the US – which faces all these problems – has seen the dollar sail ever higher. It’s risen against the euro, sterling and every Asian currency except the yen, the renminbi and the Hong Kong dollar.Baffling as it may look, there is an explanation. The dollar is not like other currencies. Indeed, it’s so exceptional that further gains are still perfectly possible while the crisis continues …To see the scale of the dollar’s outperformance, take a look at the chart below. It shows trade-weighted indices for the dollar and the pound. After declining together for well over a year, spot the difference since last summer.Why is this? There are a number of factors at play. One is American investors dumping ‘riskier’ foreign assets and returning their money home, which of course involves selling foreign currencies and… Read full this story
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Why the dollar will get even stronger from here have 330 words, post on moneyweek.com at March 16, 2009. This is cached page on Vietnam Dance. If you want remove this page, please contact us.