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Global Treasury

The Dollar’s Ups and Downs

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February 20, 2015

The impertinent impermanence of the dollar can cause headaches for those declaring its death.

The adage “This too shall pass” is an old one and means that all situations, either positive or negative, are temporary. And so it is with the US dollar, although with its weaker performance against the yen and the euro for so many years, one could be forgiven for thinking it would stay forever weak.

In 1995, the buck was really struggling against the yen and it looked as though it was on its way to losing its reserve status. “The world's financial markets appear to have resoundingly rejected the assumption that the best way to maximize the value of future cash flows is to make them US dollar denominated,” International Treasurer stated in a March 1995 article titled “The King is Dead.”

But this too did pass. With a few years it was back to king status, and then within a few more it was back to pauper. It’s been a similar state of affairs vs. the euro: riding high in April, shot down in May.

Today the dollar is getting back to the king status, although today’s king is a little different, a little lesser a king, what with nods to global business, exports, currency wars, etc.

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