Forex Blog: Currency Trading News & Analysis.

January 17th 2007

Euro displaces Dollar in global capital markets

That the USD has remained the world’s de facto reserve currency has surely prevented the currency from declining significantly at a time when economic fundamentals seem to warrant it. However, the USD is slowly losing its luster as many of the world’s central banks have formally announced plans to diversify their foreign exchange holdings by holding more assets denominated in assets. As if that weren’t enough, a tally of global bond issues revealed that for the second consecutive year, more bonds were denominated in Euros than in USD. In addition, US stock exchanges accounted for just 15% of global equity offerings, down from 60% in 2000. The implications for foreign exchange markets are ominous: the role of the USD in global capital markets is diminishing, which is bad news for USD bulls. The Financial Times reports:

As recently as 2002, outstanding euro-denominated issuance represented just 27 per cent of the global pie, compared with 51 per cent for the dollar.

Read More: Euro displaces dollar in bond markets

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Posted by Adam Kritzer | in Central Banks, Euro, US Dollar | No Comments »

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