Dollar In Dumps – Or Is It? January 4, 2006
Posted by ameyashenoy in Fx.1 comment so far
To all those who fear that dollar will go into dumps….sooner or later… Milton Friedman gives a cool behavioral twist to it……here
No doubt, that dollar is in a weak position due to the unsustainable BOP situation. But certainly all those who cry about dollar being potentially weak – due to the dollar holdings of central banks and a possibility of them dumping those dollars - may be wrong. What Friedman is saying is that dollar is going to be the reserve currency of the world – it better be, otherwise those who are long on the dollar (world central banks) will suffer, of course along with US.
But then everyone will go long on the dollar using this logic – someone should lose – the question is who?
