Tuesday, January 02, 2007

"Central Banks Tiptoeing Away From the Dollar" -- NYT

Except for the article's first sentence, which is a bit over the top, this strikes me as a pretty reasonable attempt to explain the "soft landing for the dollar" scenario, in which foreign central banks as gently as possible replace some of their dollars and dollar-denominated holdings with Euros or baskets of foreign currencies. They have no interest in doing anything which will reduce the value of their remaining dollar holdings or in damaging their ability to sell to the USA. They are not fools.

A likely slow, persistent downward long-term trend for the dollar implies rewards or at least help from a reasonably-weighted foreign component to your long-term (remember, we're long-term-focused here,) investing approach.

It is also helpful to remember that the flip side of a problem is sometimes an opportunity!

Central Banks Tiptoeing Away From the Dollar - New York Times

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