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Business News/ Home Page / Quick Edit | Fall and rise of the dollar
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Quick Edit | Fall and rise of the dollar

Quick Edit | Fall and rise of the dollar

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In the land of the blind, the dollar is back to being the one-eyed king—at least for now.

A year ago, investors fled to the dollar as a safe haven when everything else looked terrible. Then, as fear eased during the middle of 2009, the dollar began to be used as the cheap “carry trade" mule one could borrow to fund higher-yielding assets.

But late last week, the currency surged, gaining the most in three months. A good guess, given new jitteriness in global markets, is that the dollar is again a safer asset— especially when seen against, say, Islamic bonds from Dubai or sovereign paper from Greece. Both are at the forefront of recent concerns about high debt and sovereign default. This flight to safety has also meant a recent drop in gold prices—something Indian investors, who may have stocked up on gold in recent weeks, should watch out for.

The dollar may well end 2009 on a good note, but what about next year? If public debt is the newest lesson of the crisis, the US government is surely yet to learn it.

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Published: 21 Dec 2009, 12:33 AM IST
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