Over the week-end we got positive dollar comments from Russian finance Minister Kudrin at the G8 finance minister meetings. Now we have the BRIC meeting in Russia to discuss global finance. One day dollar positive and the next day we may get dollar negative news about the reserve status of the dollar.
This back and forth does not help the world financial system when there is mixed statements on the role of the dollar. While there is unlikely to be a significant change in reserve status in the near-term, the continued discussion of this issue creates noise and uncertainty. This has created a risk overhang in the dollar which I call the dollar reserve risk premium.
This back and forth does not help the world financial system when there is mixed statements on the role of the dollar. While there is unlikely to be a significant change in reserve status in the near-term, the continued discussion of this issue creates noise and uncertainty. This has created a risk overhang in the dollar which I call the dollar reserve risk premium.
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