Role and value of U.S. dollar are set to fall!
TOKYO, Japan - March 19, 2009 - The role of the U.S. dollar as the key global currency will decline after the financial crisis and its value may also weaken due to Amerika's current account deficit, according to officials at some of Asia's top think tanks.
But Asia, which is heavily invested in U.S. 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 after the U.S. Federal Reserve said it would buy long-term Treasuries.
The Fed move stirred worries that the U.S. 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 U.S. deficit is so huge,” he said. “This is why all countries, particularly East Asia, are concerned, because we hold a lot of these assets. What happens if the U.S. dollar falls 40 percent? Many central bankers will be losing huge amounts of money."