Thursday, March 19, 2009
The role of the U.S. dollar as the key global currency will decline after the financial crisis, and its value may also weaken due to America’s current account deficit, officials at some of Asia’s top think tanks said.
But Asia, which is heavily invested in U.S. assets, hopes any decline in the dollar will be gradual to avoid further shocks to financial systems, the officials said on Thursday.
“The dollar’s role will gradually be shifted,” Zhang Yunling, director of Institute of Asian and Pacific Studies at Chinese Academy of Social Sciences, told a news conference in Tokyo after a meeting of Asian research groups.
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“China hopes to have a stable and gradual transition rather than a radical revolution,” he added.
The dollar logged its biggest daily fall against a basket of currencies in more than two decades on Wednesday as the U.S. Federal Reserve said it would buy long-term Treasuries.
The Fed move stirred worries that the U.S. would spew dollars into global markets, leading to an oversupply of the world’s main reserve currency.