The dollar recently hit a 14-month low, but some experts say they see no sign of an impending crash.
“Panicking over the dollar decline to this point is unwarranted,” Frederic Mishkin, a former Federal Reserve governor, told the Financial Times.
“We haven’t seen a big sell-off in long-term Treasuries at the same time. We haven’t seen a run-up in inflation expectations,” said Mishkin, now a professor at Columbia University.
The U.S. Dollar Index has slipped only 7 percent this year. That’s nothing compared to the stock market’s plunge last year, for instance, although the dollar’s loss over the long-term tends to be permanent.
“There is always a risk when you get a depreciation like this that people jump on the bandwagon and things get out of hand quickly,” Anne Krueger, former World Bank chief economist and IMF deputy director, told the FT.
But she doesn’t think this will happen.
“What currency are they going to go into?” asks Krueger, now a Johns Hopkins University professor.
The euro is a major currency but doesn’t have a single government bond market behind it. Japan’s 20 years of economic weakness and aging population don’t inspire confidence in the yen.
And China’s yuan doesn’t even float freely — yet.
Even legendary investor Jim Rogers, who does expect the dollar to ultimately lose its primacy as a reserve currency, doesn’t see it happening soon.
“If the world desperately needed something, it would be the euro or gold or maybe a basket of currencies or even a basket of commodities,” he told Moneynews.com
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