While dumping dollars and buying euros, China has sought to turn its American bond holdings into shares in American corporations.
Investors dumped dollars yesterday, sending the euro to a record high and putting the American currency at par with the Canadian dollar for the first time in more than 30 years.
Although many economists consider an all-out collapse of the dollar unlikely, they acknowledge that such a collapse could occur if overseas investors, fearing a relentless decline, start dumping dollars from their portfolios — accelerating exactly what they fear might happen.
Though it's not likely that the dollar will completely collapse, economists acknowledge that a collapse could occur if overseas investors start dumping dollars from their portfolios, fearing a decline.
This is what happens when you live in a state small enough population-wise, swingy enough and with a sufficiently concentrated media market that dumping dollars can have a lot of apparent leverage.
A crash might be averted if China holds fast too, because it recognises how self-defeating dumping dollars would be to such a large owner of American assets.Yet a pessimist would counter that a revaluation of emerging-market currencies against the dollar could easily turn disorderly.
Demand for currencies like the Japanese yen and Swiss franc, seen as relatively safe assets to hold in turbulent times, have surged in recent weeks, driving up their value as investors have dumped dollars and euros as a result of debt worries in the United States and Europe.
On Wednesday, it was smaller-than-expected oil inventory data that has oil bulls dumping dollars for oil that, approaching noon, crested at $80 a barrel.
