Beijing and Riyadh will call the shots on ailing dollar's future
It's been widely assumed Europe has escaped the worst of the credit crisis. And with the exception of UBS et al, the writedowns suffered by Continental banks have been much less than those in the States.After months of squabbling, not least at last month's G7 summit, an agreement has been struck that the greenback has become so weak it could soon slip into freefall. So, in a co-ordinated move, ECB and Fed officials are now talking the currency up, whispering to journalists and the markets that if the dollar doesn't strengthen there'll be "intervention" - which, for now at least, bolsters the greenback. But the situation is by no means stable. One reason is that the US has got by far the better end of the deal. The dollar seems to have stabilised, but at a level well below most estimates of its fundamental value.
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