HispanicBusiness

Since March, the U.S. dollar has declined 14 percent against major currencies. However, the topic did not deserve an allusion in the final declaration issued by the Ministers of Finance and central bankers of the industrialized economies at the conclusion of a meeting, held in Istanbul, parallel to the annual meetings of the World Bank and the International Monetary Fund.

After the meeting, U.S. Treasury Secretary Timothy Geithner reiterated the importance of a strong dollar. Also, the head of the European central bank, Jean Claude Trichet agreed that a "strong dollar policy is extremely important in the present circumstances."

Meanwhile, the dollar was trading close to 1.50 to the euro and at less than 90 to the yen. This was good news for U.S. exporters and was seen as bad news for exporters to the United States. Therefore, the central banks of Indonesia, South Korea and Thailand intervened in foreign exchange markets, buying dollars, to stop the corresponding appreciation of their currencies.

There were also rumors about secret talks among some governments about abandoning the dollar for trade in oil. These rumors were quickly denied by spokespersons from the Saudi Arabian and Russian governments. By the end of last week, commodity prices did increase, particularly crude oil futures rose above $70 and gold futures rose to almost $1,040.

A more positive interpretation of these events saw the dollar slide as an indication that investors are becoming less risk averse, as they were during the turmoil of last year, when they found refuge in the US dollar.


Isaac Cohen is Former Director, Washington Office of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). He also serves as a commentator on economic and financial issues for CNN en Espanol TV and radio.