The U.S. dollar will keep its reserve-currency status in 2011 because China and other nations aren’t developed enough for their currencies to replace it, according to Pacific Investment Management Co., which runs the world’s biggest bond fund.
“The U.S. will preserve its reserve status primarily because it remains the world’s preeminent power economically, politically, and militarily,” Anthony Crescenzi, a money manager at Pimco in Newport Beach, California, wrote in a report yesterday. “The currencies of rising powers such as China are not yet ready to absorb the $9 trillion in reserve assets the world holds, particularly because their bond markets are immature and can’t house reserve assets as U.S. markets can.”
The U.S. currency headed for a gain in 2010 even as officials around the world said Federal Reserve policies to add $600 billion to the U.S. economy would debase the currency.
IntercontinentalExchange Inc.’s U.S. Dollar Index gained 2.5 percent this year, after sliding 4.2 percent in 2009, according to data compiled by Bloomberg.
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