Forex Investment and Currency Trading

From Reuters.
 
“A United Nations panel of experts will recommend next week that the world move away from using the dollar as a reserve currency and adopt a shared basket of currencies instead, one of its members says. Avinash Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket. Persaud said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.”
 
Time for USD’s mandatory retirement as a reserve currency? This is not a fast moving train, but the process of moving away from USD as a reserve currency has been long discussed. Such a move would give these efforts a bit more drive and largely reflect concern about the US backdrop and confidence in USD’s ability to remain the primary reserve currency, a title it has held for 65 years since 1944 and the Bretton Woods system of fixed exchange rates — the US consumer will not be the driving force of global growth in coming years; the US fiscal situation is onerous with debt levels and issuance at extremes; foreign investors held 54.4% of US Treasury securities through Q4, which is actually down from the peak of 56.8% in 2008Q; those who hold US Treasuries are getting antsy (that would be China that held US$739.6bn of Treasuries in January 2009. Japan was second at US$634.8, but is fading in the rearview mirror).
 
Of course, to move away from USD, even to a basket, other currencies have to have sufficient depth to handle it. Thus, the recommendation on USD is interesting, but such a transition is a story that will unfold over years, not days.