A dollar for your thoughts

19 November 2007 By Edward Hadas Follow @edwardhadas

Some Opec members are trying to wriggle out of their dependence on the US currency. The motivation is partly political, but the investment case against the greenback is sound. The US has big debts, low interest rates and the ingredients for an inflation problem.

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The G20 meeting of finance ministers and central bank governors said that an orderly unwinding of global imbalances, while sustaining global growth, is a shared responsibility. In an communiqué, they agreed that this required "reforms to boost domestic demand in emerging Asia, together with greater exchange rate flexibility in a number of surplus countries."

The trade weighted DXY index for the US dollar increased from 75.39 to 75.79 in the week starting 12th Nov. However, it has fallen from 80.92 at the start of August.

ArcelorMittal announced an increase of $40/t for the US market from 1st Jan 2008. In Europe, the price increase will be applied from Q2.

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