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FT: Investment: Dollar Disruptions

Author: Robin Wigglesworth
January 12, 2014


"A dollar renaissance is unlikely to prove as agonising as it did in the past. The biggest risk in 2014 is going to be the more immediate impact that the Fed's unwinding of its quantitative easing programme will have on global borrowing costs. Chinese economic growth – a big driver of emerging economies – is another wild card. But a stronger dollar will not prove painless and policy makers in the developing world should not be complacent."

For a brief moment in 2007 Gisele Bündchen became the fetching face of dollar doomsayers, when her agent revealed that the Brazilian supermodel would prefer to be paid in euros rather than the struggling US currency.

At the time it seemed like a sensible move. Dollar-bashing was all the rage. Even rap stars waved wads of euros instead of the usual "Benjamins" – $100 bills. But after the onset of the financial crisis in 2008, the dollar defied the sceptics as investors swallowed misgivings and dived into everyone's default safe place: US government bonds. Even as the Federal Reserve printed $2.5tn to prevent a financial collapse, the dollar stayed stable.

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