US dollar undervalued and it may become more so

They include the story this week that the United Arab Emirates may cut the link with the dollar, as Kuwait already has done. If there were a general loss of confidence then the dollar could fall quite a lot more. Eventually there will be a floor – there always is – but the collapse would be disruptive, not least to the European economy, where exporters are suffering from the surge in the euro.

If things really get out of hand, there may have to be some dollar rescue but that – for the moment at least – seems some way off. The big point is even when the dollar does recover the world will be different. Maybe we will still price oil in dollars but a lot more people around the world will think – and place their assets – in euros, Independent reports.

Sources: agencies