Dollar Loses 4.2% in 2009
The dollar rally in December 2009 helped the dollar post its first monthly since June and trimmed dollar losses to 4.2% for 2009. The dollar hit a three month high vs. the yen and gained on the euro as the Federal Reserve reported that job losses were ‘abating.’ A surge in Treasury yields made the dollar less attractive as a funding currency for carry trades. The dollar gained after the non farm payrolls report said that US employers trimmed fewer jobs in November and showed a vast improvement in employment figures. Money manager Thanos Papasavvas stated, “We are seeing the dollar recover probably into the first quarter of next year. We would expect the unemployment rate to start to stabilize.”
Central Banks Cut Dollar Reserves
There was also bad news for the dollar. Central banks in emerging market countries cut the US dollars share of their foreign reserves for the second consecutive quarter. The dollar’s share fell below 60% during a three month period ending September 2009, the lowest level in five years. Goldman Sachs economist Thomas Stolper wrote, “It is getting more and more difficult to dismiss the ongoing decline in the share of dollar reserves as temporary noise. It is now increasingly likely that emerging-market central banks have indeed decided to reduce the share of dollar reserves.” China, Russia and other developing countries are seriously questioning the greenback’s status as a global reserve currency. Massive US debt has caused concern about the stability of the dollar.
Canadian and Aussie Dollars Benefit
In September World Bank president Robert Zoellick said the dollar’s reserve status should not be taken for granted and may be challenged in the future. The Aussie and Canadian dollar were chief beneficiaries of the move away from US dollars according to Goldman Sachs experts. Goldman Sachs, working with IMF data reported that the category of “other currencies” rose from 2.2% to 3.2%.
Quick Forex Tip: Forex trading offers investors a profitable investment option and can be one of the most rewarding opportunities available to the average investor. Major attractions are the 24 hour a day availability of forex markets, low dealing costs, high leverage margin and high liquidity. Currency trading forex can be learned quickly and easily. There are several free reputable courses available online and many online forex dealers provide demo accounts where novice traders can learn the market before risking any real money.
