US Dollar Will Retain Reserve Role If Markets Stay Sound, S&P Says

The dollar will retain its status as the world’s reserve currency as
long as U.S. financial markets are sound and government spending is
sustainable, Standard & Poor’s said.

The greenback is “the world’s most accepted currency,” even after the
global recession that began in the U.S., John Chambers, chairman of
the S&P sovereign ratings committee, wrote in a report released today.
The dollar supports the nation’s top AAA credit ranking, improves the
government’s access to external financing and helps lower borrowing
costs, he wrote.

“The dollar’s widespread acceptance stems from the U.S. economy’s
fundamental strength, which in our view comes from the economy’s size
and the flexibility of labor and product markets,” New York-based
Chambers wrote with David Beers, global head of sovereign ratings at
S&P in London. “We view U.S. banking and capital markets to be dynamic
and unfettered relative to their peers.”

Pacific Investment Management Co., the world’s biggest manager of bond
funds, said in its August 2009 Emerging Markets Watch report the
dollar’s reserve status was endangered as the government pumped
“massive” amounts of money into the economy to stimulate growth.

The dollar has gained 4.9 percent this year against the euro, the
second biggest destination for international reserves, rising to
$1.3657 at yesterday’s close.

=The US Dollar Is Hedge Funds' Favorite Currency Right Now=

The majority of hedge fund managers surveyed say their favorite
currency right now is the dollar.

The TrimTabs/Barclay Hedge survey in February asked 61 traders and
fund managers (that have an average of $113 million in assets under
management) what their favorite currencies were.

The dollar won the majority, with 57% voting it as their favorite, the
Brazilian real and the Australian dollar are "distant seconds," and
Sterling was the least favorite, with only 3% of respondents.

source: http://intermoney.org/