Laurence Fink, CEO of money management titan BlackRock, is bullish on the dollar, but sees risk on the horizon.
“I believe the dollar is a better store of wealth than the euro and sterling over the long run,” he told Bloomberg.
“My concern relative to the dollar is we’re a reserve currency, and through our problems we’re probably taking advantage a bit of our situation.”
The foreigners who are financing our deficit “are a little concerned. Are we too abusive about having that reserve currency?” Fink says.
“That’s a debatable question. If we don’t tackle our deficits, don’t tackle our economic situation in a comprehensive way, the answer is yes.”
As for the U.S. economy, Fink says it’s “not in the hospital, but we’re … going to be convalescing for many years to come.”
Inflation isn’t a worry now, he says.
“I think the marketplace is saying there’s so much excess capacity in our economy that inflation is going to be delayed for many years ahead. The only risk the market place may not appreciate enough: Could we ever enter a realm of stagflation?”
In the meantime, investors are ready to act, Fink says.
“At BlackRock right now, we have a record amount of requests for (investment) proposals.”
Many agree with Fink that the dollar will stabilize.
"We've obviously had a fairly big move. There's not much … to drive the market further, Derek Halpenny at Bank of Tokyo Mitsubishi UFJ told Reuters.
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