IDEAS home Printed from https://ideas.repec.org/a/cii/cepill/2009-289.html
   My bibliography  Save this article

The Dollar - Unsafe Haven

Author

Listed:
  • Agnès Bénassy-Quéré

Abstract

Just like any market price, the exchange rate for the dollar fluctuates based on supply and demand. By observing the constituent elements of the supply and demand for dollar assets, we can thus explain the significant appreciation of the dollar during the second half of 2008. Over this period, during which the crisis spread to the whole of the global economy, US Treasury bonds acted as a safe haven, but in net terms foreign investors ceased buying US private securities. Americans, on the other hand, repatriated capital on a massive scale, driving up the net demand for dollars. Supply of dollar assets fell more rapidly than the global supply of assets and thus shored up the US currency. The dollar's future movements remain one of the greatest uncertainties following the crisis, even though the forecast made before the beginning of the crisis remains valid: if the ongoing US deficit is to be resorbed, a weak dollar will continue to be required.

Suggested Citation

  • Agnès Bénassy-Quéré, 2009. "The Dollar - Unsafe Haven," La Lettre du CEPII, CEPII research center, issue 289.
  • Handle: RePEc:cii:cepill:2009-289
    as

    Download full text from publisher

    File URL: http://www.cepii.fr/PDF_PUB/lettre/2009/let289ang.pdf
    Download Restriction: no

    More about this item

    Keywords

    DOLLAR; EXCHANGE RATE;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cii:cepill:2009-289. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/cepiifr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.