# freefall for dollar?



## markowitzman (1 Jun 2006)

[broken link removed]
up to 50% freefall?
As usual I am at the contrarian end and am pro-dollar long term and am drip feeding money into dollar blue chips and etfs.
Feel if dollar tanked the big boys will reallocate more money for the US markets?
Interested to hear other views.


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## gearoidmm (1 Jun 2006)

Given that a large part of investments in US treasuries and bonds are by foreign (especially far eastern) investors, what makes you think that a falling dollar (thus reducing the value of their investments) would encourage them to buy more.

There is a consensus out there that the massive US current account deficit will only be fixed by a significant depreciation of the dollar (thus reducing imports).  This was emphasized by the fact that at the last G8 meeting, they spoke about an orderly fall in the dollar to reduce 'global imbalances', i.e. US consumers spending too much.

What I can't understand is how, in this environment, people are stilling buying dollar-denominated assets when it looks likely that, through currency devaluation alone, they are going to lose significant value in the next year or so.


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## kellyiom (2 Jun 2006)

interesting topic- think there's a gradual shift away from USD as a natural currency of reference to the major economies; Russia recently announced its petroleum fund's $66bn was going to be allocated 45% USD 45% EUR and 10% GBP for example. Trying to call the changes is like trying to catch a falling knife tho for me anyways!


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## rusty (3 Jun 2006)

freefall?
i guess that must be already priced in by the markets. How about keeping 25% of your foreign assets in dollars?
I mean, that's what I do.


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## markowitzman (4 Jun 2006)

I agree rusty........when the consensus says don't do something I think it is time to start thinking of just doing so. Can you expand on why you think this is priced already in the market?
I am looking at 10-15% via equities and property.


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