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Tuesday, September 15, 2009

A question on Currency Crisis

One of the most intriguing phenomenons during this recent slow-down has been the strengthen shown by non-dollar developed world currencies like GBP, AUD, Yen, EUR etc. I mean there has been correction, in Yen particularly. But it has not been of worrisome magnitude as anticipated.

Most of the developed world currencies are facing very similar problems like US. Consumption driven economy is fed by low-cost debt. Significant percentage of population is old. As the credit crisis struck the demand for good plummeted. The over-all economic model seems weakened just like the US. The only thing stopping a dollar collapse is USD's world currency status. But then why have these other currencies not fallen. Is the USD holding these up?