In The News

Don’t Bet Against the Greenback Yet

Erik Britton and Danny Gabay April 10, 2014
The US benefits from its reserve currency status; 85 percent of all global transactions involve the dollar. But the dollar is worth less than half its value from 1973. Two threats to the dollar’s status as reserve currency include stagnation in demand within the United States and the rise of China’s fully convertible yuan, suggest Erik Britton and Danny Gabay for the Asia Sentinel. They analyze...

Self-Insurance or Self-Destruction?

Gene Frieda April 7, 2014
The US Federal Reserve is gradually pulling back after months of purchasing bonds to inject liquidity into global markets. As liquidity shifts toward developed economies, the foreign reserves of emerging economies may not be enough to protect those financial systems, argues global strategist Gene Frieda for Project Syndicate: “In order to break the destabilizing cycle of short-term capital flows...

Emerge, Splurge, Purge

March 7, 2014
Multinational makers of phones, cars, beverages, and household products of all types have long eyed the emerging markets – the “geography seduced everyone,” suggests the Economist. Then the US Federal Reserve announced in mid-2013 that it would reduce bond purchases. Currencies of emerging economies in India, Turkey and South Africa fell in value along with a drop in consumer demand. The...

Why Do We Value Gold?

Justin Rowlatt December 23, 2013
Historically, governments and investors have revered gold. Justin Rowlatt of the BBC News questions the reasons behind this value while also reporting on the British Museum’s exhibition on pre-Columbian gold artifacts. A chemistry professor quoted in the story points out that gold is distinctive. Gases, alkaline metals and other elements are simply too unstable or difficult to smelt. Gold is...

US Debt Standoff Provokes Ire in China

Simon Rabinovitch October 14, 2013
The threat of US debt default is bolstering China’s desire to lessen the world’s reliance on the dollar, reports Simon Rabinovitch for the Financial Times. Chinese officials and analysts are angry and incredulous about US budget shenanigans, but so far are avoiding public comment or drastic moves. “With $1.3tn invested in US Treasuries, any sudden move to sell those holdings would by itself shake...

Reform and Rebalance

Nayan Chanda October 9, 2013
The US Federal Reserve Board decides monetary policy that influences interest rates at home and overseas. Since the 2007 credit crisis, the Federal Reserve has purchased bonds to inject money into the economy – a policy that lowered interest rates and prompted investors to hunt for higher returns overseas. With slow improvement in the economy, many investors began thinking about returning to US...

Currency Conundrum

Nayan Chanda September 17, 2013
India’s dysfunctional political system has exacerbated the currency crisis, argues Nayan Chanda, YaleGlobal editor, in his column for Businessworld. Officials blame Indian investors’ keen interest in gold, over-exposure to global markets and over-reaction to reports of a strengthening US economy. Chanda suggests that Indian officials – whose country has benefited so much from globalization –...