Interesting article in today’s Khaleej Times, Dubai World launches Web site in Chinese. Investors from China and Gulf countries are getting acquainted because there is a real resource complementarity between the regions. And because both have been repelled by the U.S. authorities in recent attempts to invest their vast stocks of dollars. I think the U.S. has triggered the dollar selloff not by increasing the supply of dollars (the monetary base and bank reserves have each grown less than 2% in the last year), but by eroding the demand for dollar assets by showing investors that they will not be allowed to use the dollars to buy assets.
JR
Is it possible that the action of the Bernanke Fed reduces the demand for US dollar?