No doubt you have heard that the MPC in the UK and the ECB both announced 25 beep rate hikes today and that the Reserve Bank of Australia also hiked. According to Jyske Bank, rate hikes are also expected in Denmark and South Africa.
Rick Santelli very quickly mentioned that the Bank of Italy increased its reserve holdings of British pounds from 0% to 24% at the expense of the greenback and the yen.
Demand for dollars or the decline thereof has been a point of concern here for ages. The path to less demand for dollars has been clear and obvious (IMO) for a while. If this continues to pan out it means interest rates will have to be generally higher than they are now which dominoes into a whole host of other obstacles for the economy and consumers.
My opinion about this has been consistent in that I expect this to occur but I do not believe it will be economically apocalyptic.
This will make exposure to foreign stocks, bond and cash all the more important.
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1 comments:
Aye...the best way to get out of deficit trouble......GROW your way out. ( let the inflation roll )
Which will help the OTHER deficit...trade. Bec our good will be cheaper if the dollar falls.
So......while it is true our currency will be "devaluated"...the economy will rock and roll.
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