Will US Dollar fall?

[danisara]

The US dollar has appreciated a little in the past few weeks. But, what happens when China and other states such as Saudi Arabia and Japan decide to diversify their foreign reserves into other currencies (especially Euro). China is by far the largest US creditor. What if they decide to sell all the U.S. Treasuries they own today. Wouldn't that be the end of the USA?

[bugibar]

If you look at what has been going on with the greenback over the past few years, you can see that it has depreciated some 30% over the past a few years. It is really a lot. We can see some temporarily appreciation in the past few weeks, but I see that really as temporary, as a result of massive drop in the price of oil which is a reaction to global slowdown.

Once the prospects of the US and global economy improve, we will see some boost to the price of oil, and if the humangous public deficit plus the extreme trade deficit with China does not improve (if our government does not start doing something!!!), the US dollar will resume its spiral into the hell.