Announcements on Thursday from the Qatari and Vietnamese governments that they are rapidly divesting in dollar denominated securities will not come as good news to the US government. Overseas investors hold half of America’s $4,400bn of marketable government debt, up from a third in 2001 according to the US Treasury department. Qatari Prime Minister, Sheikh Hamad bin Jassim bin Jabr al-Thani said on US TV that the government-backed $50bn Qatari Investment Authority (QIA) now had less than 40 per cent of its investments in dollars, down from a high two years ago of 99 per cent.
Given that the Emirate’s oil and gas revenue is in dollars, the latest troubles in the US economy have accelerated the need to diversify investments into non-dollar markets. Currencies such as the Euro, the British Pound and the Swiss Frank, are all looking far more stable as investments for the QIA, said Sheikh Hamad.
Such was the Qatari PM’s concern about the sliding dollar, that he even said an oil price of $125 per barrel would not be unreasonable.
On Thursday, the State Bank of Vietnam quietly let slip it would be ending its dollar purchase schemes, which it has been using to hold down the Vietnamese currency. Although it only has middling dollar reserves of $40bn, Vietnam is widely regarded as a barometer for economic sentiment among other, bigger, regional dollar sinks like China, Taiwan, Korea or Singapore. Hans Redeker, currency chief at BNP Paribas, told the Telegraph:
Vietnam is a relatively small country but it is symptomatic of Asia. The entire region is seeing inflation move up as a result of mercantilist policies of holding down their currencies with ‘dirty floats’, which are designed to help their export sectors. They need to change monetary policy.
Cue dollar sale.
5 comments:
This is a big thing for the US. Peaches was in Qatar and that is a rich oil country with everything. She showed me pictures as all the citizens share in the oil profit and drive BMW and expensive cars. The shows are beautiful and friendly to Americans. All the troops have a rest time in Qatar.
As for Vietnam well it goes without saying we messed up yet again.
that would be a triple C rating????
The dollar is getting to be more worthless every single day. Never have I ever imagined that so many countries don't want the dollar, how many does this make now?
hey now, the economy is going gangbusters, except for that dollar thingy. kinda like that tablecloth trick, where the china remains but the table isn't really set.
Markie,
The dollar is slipping fast. For those who still have pesos in your pocket, hold on to them because they will surpass the buck soon.
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