A few days ago, I wrote a post titled
Seeking Dollars Desperately: Massive US Dollar Shortage in Argentina as Peso Inflation Runs 25%-30%. Here's another Dollar Scarce story:
(Bloomberg) May 29, 2012 — The dollar is proving scarce, even after the Federal Reserve flooded
the financial system with an extra $2.3 trillion, as the amount of the
highest-quality assets available worldwide shrinks.
From last year’s low on July 27, the greenback has risen against all
16 of its major peers. Intercontinental Exchange Inc.’s Dollar Index
surged 12 percent, higher now than when the Fed began creating dollars
to buy bonds under its extraordinary stimulus measures at the end of
2008.
International investors and financial institutions that are required
to own only the highest quality assets to meet investment guidelines or
new regulations are finding fewer options beyond dollar-denominated
assets. [...]
“The pool of high-rated assets has been shrinking, not just in the
euro zone but elsewhere as well,” Ian Stannard, Morgan Stanley’s head of
Europe currency strategy, said in a May 22 telephone interview. “With
the core of Europe shrinking, and the available assets for reserve
purposes shrinking, it makes the euro zone less attractive.”
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