FX Alpha 15 October 2013

Will the US exorbitant privilege destroy itself?

 

The FX market still is relaxed about the US budget crisis, given that a last-minute solution seems to be likely again. We argue, however, that the developments so far pose a long-term risk for the dollar. US politicians one day might damage the US dollar’s status as the world’s dominant currency, whatever they will do to solve the current crisis.

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