decline of dollar.!

The days of hegemony of dollar seems to be numbered. The currency has lost its value against the major currencies of the world in the recent past. We appear to be heading to an era in which an international reserve currency would replace the dollar. Some major economies of the world like China ,Russia have already expressed there reservations against dollar and its prolonged mismanagement by the US authorities.

The US seems to be enjoying its leisure on borrowed money as most of foreign exchange surpluses of countries like india and china have been parked in the US treasury bonds at interest rates of 2-3%. These funds then in turn help the US to manage its trade deficit and thus providing resources to the government for funding its wars and in some way fuelling the private consumption story.

But the recent quantitative easing in the US have cast doubts about the credibility of dollar resulting in the loss of the investor's faith. The US seems to have found a way to get rid of its foreign debt by debasing the real value of dollar which has made countries like china quite jittery. Such events have contributed to the viewpoint that time has come to evolve a global currency which can replace dollar in due course of time.