Euro is getting stronger day by day. Starting its counter against Dollar in 1999 at 1.17 to a dollar now it is 1.34 after the turbulence's in last 8 years. Is now Euro taking the glitter of Dollar ?
Dollar which constituted 70.9% of the Global Currency Reserves in 1999 was at its peak when Euro was introduced which stood at 17.9%. Gradually over years Euro as a new reserve currency has become popular. At the end of 2006 the Dollar has slipped to 65.7% and Euro has climbed to 25.2 %
China in 2005 unpegged the exchange rates against US Dollar when 1 Dollar was 8.28Yuan (Renminbis) and now which stands at to 1 Dollar = 7.65 Did this move by China lead to the decline of Dollar ?
Also China which is the biggest holder of foreign exchange reserves at $1202 billion of the total $5820 billion foreign exchange reserve of the world. United states itself only holds 66 billion !
The US trade deficit with China in 2006 was 232 billion.
I know it sounds like the statistics provided by Vijayakanth ! (Indian - Tamil readers would understand; others please excuse) but this is the tip of the iceberg.
Will there be a Dollar Collapse ? No one can guess this; may be the FED has more information !
I would guess it as "No" as in the short term a Dollar collapse is not good for the countries which have a high concentration of its foreign reserves in US Dollar. For sure the Dollar loosing its strength will alter many economics and the way in which trade is being done in the world today !
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