One of the few calamities that has not befallen the world economy during the past two years is a dollar crash. Between September 2008 (when Lehman Brothers failed) and March 2009 (when America’s stock markets hit bottom), the dollar rose by almost 13% on a trade-weighted basis. For the past six months the greenback has been sinking steadily, hitting a 14-month low against a basket of leading currencies. A weaker dollar should also assist global economic rebalancing by helping to reorient America’s economy towards exports. So in general, it should help rather than hinder the global recovery. Is it the end of America’s status as the world’s reserve currency?
(From The Economist)
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