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Think tanks: Role and value of US dollar set to fall
(Agencies)
Updated: 2009-03-19 15:48 TOKYO -- The role of the US dollar as the key global currency will decline after the financial crisis, and its value may also weaken due to America's current account deficit, officials at some of Asia's top think tanks said.
But Asia, which is heavily invested in US assets, hopes any decline in the dollar will be gradual to avoid further shocks to financial systems, the officials said on Thursday. "The dollar's role will gradually be shifted," Zhang Yunling, director of Institute of Asian and Pacific Studies at Chinese Academy of Social Sciences, told a news conference in Tokyo after a meeting of Asian research groups. "China hopes to have a stable and gradual transition rather than a radical revolution," he added. The dollar logged its biggest daily fall against a basket of currencies in more than two decades on Wednesday as the US Federal Reserve said it would buy long-term Treasuries. The Fed move stirred worries that the US would spew dollars into global markets, leading to an oversupply of the world's main reserve currency. Chalongphob Sussangkarn, a former Thai finance minister and now president of Thailand Development Research Institute, also expressed worries about any sharp fall in the dollar. "The US deficit is so huge. This is why all countries, particularly East Asia, are concerned because we hold a lot of these assets. What happens if the US dollar falls 40 percent? Many central bankers will be losing huge amounts of money." The officials also called on East Asian leaders attending next month's G20 summit in the UK to avoid competitive currency depreciation as a way to escape from the current crisis. |
