Russia Says It’s Time To Discuss New World Currency As Dollar Collapses
Jun 2, 2009 2 Comments ›› Pat Dollard
Excerpted from Bloomberg:
June 2 (Bloomberg) — The dollar weakened beyond $1.43 against the euro for the first time in 2009 on bets record U.S. borrowing will undermine the greenback, prompting nations to consider alternatives to the world’s main reserve currency.
The 16-nation euro gained for a fourth day versus the dollar as the Russian government said emerging-market leaders may discuss the idea of a supranational currency. The pound rose to the highest level since October and the Canadian dollar traded near an eight-month high on speculation signs of a recovery in U.S. housing will spur higher-yield demand.
“There’s been a lot of talk out of Russia about a new global currency, and that’s contributing toward this latest bout of dollar weakness,†said Henrik Gullberg, a currency strategist at Deutsche Bank AG in London. “These latest comments are just adding to the general dollar weakness we’ve seen recently.â€
Russian President Dmitry Medvedev may discuss his proposal to create a new world currency when he meets counterparts from Brazil, India and China this month, Natalya Timakova, a spokeswoman for the president, told reporters by phone today. Medvedev first proposed seeking alternatives to the U.S. dollar as a reserve currency in March.
The Dollar Index reached 89.62 on March 4, the highest level since 2006, as the global recession spurred investors to take refuge in Treasuries including bills.
Demand for the record amount of debt the U.S. is selling will be sufficient, Treasury Secretary Timothy Geithner said in an interview today with state media outlets in China.
China has a “very sophisticated understanding†of why the U.S. is running up deficits, Geithner said in Beijing, pledging to rein in borrowing later.
