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Friday, September 23, 2011

Resilient greenback

My latest at FrumForum: "Still Sound as a Dollar." Excerpt:
Conservatives nowadays routinely worry about the dollar’s strength and stability. The dollar, however, refuses to cooperate. Instead, it lately has been rising in foreign-exchange markets, as it typically does in times of international economic and financial stress.

The dollar serves as a safe haven. Investors tend to transfer funds into dollar-denominated assets, such as U.S. Treasuries, at moments when financial markets around the world are being buffeted. This occurs even if the U.S. economy is not in good shape. As long as the dollar and dollar-denominated assets are seen as relatively safe, the dollar will tend to strengthen in times of trouble.
Whole thing here.

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