King dollar is still beautiful days before him

Atypical, the current crisis has changed the logic and the complex relationships existing on the foreign exchange markets. In a study, which is not binding on the European Central Bank (), Marcel Fratzscher, Economist at this institution analyses these unique phenomena on the period from July 2008 to February 2009. It was, surprisingly, a marked increase in the dollar against most currencies, developed or emerging countries. But the crisis was born across the Atlantic, and it is in this country that it has experienced an acuity and unparalleled violence. Thus could have to expect that the greenback is affected in a pronounced way. It is the opposite which is produced from the summer 2008, after the dollar experienced a depreciation between 2007 and 2008 first-half.

Before the crisis, a bad surprise on us conditions reflected by a depreciation of the dollar. Since July 2008, it is the opposite happened: the greenback has appreciated on average to each new negative ad for the US economy. "This suggests, argues Economist, that bad news on the economy American were perceived as even more negative Outlook other economies, or that these new led movements real or anticipated repatriation of foreign capital in such a way that it induces a strengthening of the dollar."

World reserve currency

The United States would be so perceived by the markets as a sort of indicator of trouble to come into the world economy. Better armed than the other to deal with this country and its currency would benefit from a kind of differential of confidence on the part of other investors. An asset in times of crisis.

King dollar is still beautiful days before him. Its global reserve currency status has preserved it in part against the "tornado of the century". It has however not spared other currencies, with marked differences. All countries were not equal to the dollar's rise. The currency of those who were aware of the strong current deficits has more back against the dollar, 22 on average between July 2008 and February 2009. However, the country recorded a current surplus higher than the average of 54 countries have seen their motto down 10. Other education, countries with foreign exchange reserves reported in their domestic production gross lower than the average of the panel of the study saw their currencies down 23 against the dollar, while those for whom they are above the average recorded only 7 of their currency. This is perhaps a sign that "some countries have failed sufficient reserves to protect against the decline of their currency in times of crisis, or, in some cases, which appeared as a reserve amount deemed excessive was indeed beneficial to reduce the pressure on their currencies", said Marcel Fratzscher.

Countries where US investors are more present in terms of investments (investments in stocks and bonds) have seen their currency suffer more than others to the greenback, with a decline of 25 for those located above the average of the panel, and 14 for those below. In this case, it is the repatriation of capital out of these countries and performed by American investors who can explain the decline of their currencies.